Stocks plunge: Dow drops 333 points, turns red for 2015
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USA TODAY’s Matt Krantz on market bigshots that are holding back on dividends.
U.S. stocks fell hard Tuesday as investors continue to grapple with the prospect of coming Federal Reserve rate hikes, the downside to a strong U.S. dollar and renewed weakness in the hard-hit oil patch.
The Dow Jones industrial average tumbled 333 points, or 1.9%, to close at 17,663, in its worst drop since October 9, 2014. The Standard & Poor’s 500 index dropped 35 points, or 1.7%, to 2044. The Dow and S&P 500 are now negative for 2015.
The Nasdaq composite tumbled 82 points, or 1.7%, to 4860. On the 15th anniversary of hitting its all-time high of 5048.62, the Nasdaq is shrinking further from that mark. It is further, too, from the magic 5000 level, surpassed on only three occasions — twice way back in that March 2000 record run and then just this last Monday.
NASDAQ: All-time high remains elusive 15 years later
Weakness in European stock markets, fueled by another sharp drop in the euro currency vs. the dollar, also appears to be weighing on U.S. markets. The CAC 40 of France ended down 1.1% and the German DAX lost 0.7%.
Britain’s FTSE 100 got pummeled, closing 2.5% lower.
The euro hit a 12-year low versus the U.S. greenback, dipping to 1.077 euros per dollar. That continued sharp drop in the value of the euro — spurred by the launch of a government bond-buying program by the European Central Bank yesterday — and the resulting climb in the dollar is viewed as a negative by Wall Street.
The reason: it makes U.S. multinationals that do a lot of business in Europe less competitive because the price of U.S. goods become more expensive. If large U.S. companies sell fewer goods abroad, it will crimp corporate earnings, another negative for the U.S. stock market.
“Worries about a rising dollar and falling oil depress stocks,” money manager Louis Navellier told clients in a pre-market note.
The strong U.S. jobs data on Friday is also still weighing on investor sentiment as Wall Street speculates that the Federal Reserve may push forward its timetable to hike interest rates. Wall Street now expects the Fed to start raising rates as early as June, more than three months earlier than its prior forecast of a November hike. Lower rates, of course, are cited as one of the main driving forces of the bull market that began six years ago in March 2009.
Wall Street is also digesting the fact that the current bull market, which turned 6 on Monday, is entering its latter stages. It has already lasted about two years longer than the average bull market.
January’s wholesale sales aren’t encouraging. They plunged by their biggest amount in six years — 3.1% — the Commerce Department says.
U.S.-based crude is trading lower and back below the key $ 50 per barrel level. Renewed calls for a drop in crude to $ 40 a barrel has again unnerved investors. U.S. crude was down 3%. Falling crude prices hurts energy shares, which have been trying to bounce back after a more than 50% drop in crude prices since last summer’s peak.
In corporate news:
Credit Suisse’s incoming CEO, Tidjane Thiam. (Photo: Michael Buholzer, AFP/Getty Images)
■ Target (TGT) announced it’s eliminating 3,100 jobs. The move entails 1,700 layoffs, with the other jobs being open positions that will not be filled.
■ Credit Suisse named a new CEO, with Tidjane Thiam replacing Brady Dougan. The bank pleaded guilty last year to criminal conspiracy and agreed to pay $ 2.6 billion in penalties for helping wealthy American clients evade U.S. taxes. CS stock jumped more than 6%.
■ Apple (AAPL) sank 1.9% or more as shareholders met. The tech world, and investors, are still weighing the impact of the Apple Watch, unveiled Monday.
Overseas, Asian stock markets sank. The Nikkei in Japan shed 0.7% while Hong Kong’s Hang Seng ended 0.9% lower.
Wall Street stocks advanced in the prior session, the Dow gaining nearly 140 points.
On Tuesday, March 10th Wall Street awaits earnings and some economic data that could affect the markets. Bookseller Barnes & Noble (BKS) will report quarterly results in the morning followed by FuelCell Energy (FCEL) and VeriFone Systems. Newslook
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