Dow ends down nearly 600, after earlier 1,000-point freefall
Try Another
Audio CAPTCHA
Image CAPTCHA
Help
U.S. stocks suffered its worst week since 2011 last week. Now what happens? Adam Shell reports. USA TODAY
NEW YORK — The downdraft on Wall Street intensified Monday as the Dow Jones industrial average – which was down more than 1,000 points minutes after the opening bell — suffered its second 500-plus point drop in as many days and the selloff knocked the broader Standard & Poor’s 500-stock index into official correction mode for the first time since 2011.
Investors hoping for a bounce got a plunge instead right after the opening bell when the Dow went into freefall and fell 1,089 points in a dive described as a “huge whoosh,” by Bespoke Investment Group. The Dow’s closing point loss of 588.40 points, or 3.6%, to 15,871.35, was its 8th worse one-day point loss in history and worst daily point decline since Aug 8, 2011.
The freefall on Wall Street has now infected every corner of the stock market, with the blue-chip Dow, small-company Russell 2000, large-company S&P 500 and tech-dominated Nasdaq composite all now down more than 10% from their record peaks this year and into full-fledged corrections.
In volatile trading, the Dow initially plunged as much as 1,089 points in early trading before almost clawing back to even, only to succumb to a late-day swoon. At its low point, the Dow was in danger of suffering its worst one-day point loss on record — a 777.68 drop on Sept. 29, 2008.
The Standard & Poor’s 500 index was down 77.68 points, or 3.9%, to 1893.21 as it dipped into correction territory — which is defined as a drop of 10% or more. The Nasdaq composite index fell 179.79 points, or 3.8%, to 4526.25. The Dow is now down 13.3% from its high. The S&P 500 is off 11.2%, the Nasdaq is 13.3% below its closing peak and the Russell 200 is down 14.2% from its record.
The Dow’s midday reversal wasn’t totally shocking, given how far and how fast the blue-chip gauge fell minutes after the opening bell, says David Kotok, chief investment officer at Cumberland Advisors.
“The 1,000-point Dow down opening was an extreme,” Kotok said earlier in the session. “So a rebound was in the cards and when Europe stabilized, (the Dow) followed. “
Still, Kotok was correct when he added that he wasn’t sure the worst of the recent corrective price action on Wall Street is over: “We do not know how solid this reversal is,” Kotok told USA Today. “At this moment of the day I am still skeptical.”
Surprisingly, of more than a dozen stock market strategists that were asked by USA TODAY if the current selloff will morph into a full-fledged bear market, or 20% or worse drop, all but one said no.
Most are still in the correction camp.
“We went three years, two months and 21 days without a 10% correction in the (S&P 500),” says Don Luskin, market strategist at TrendMacro. “It was overdue. That doesn’t make it a bear market.”
Stocks remain volatile as market anxiety is on the rise after a big sell-off in China overnight, where the Shanghai composite index shed 8.5%, its biggest one-day decline since 2007 — and Chinese media were dubbing the selloff “Black Monday.” The global stock rout then moved to Europe where major indexes there are off roughly 5%.
Trader Kevin Lodewick works on the floor of the New York Stock Exchange, Friday, Aug. 21, 2015. The Dow Jones industrial average looks set for another big drop Monday after plunging more than 530 points Friday. (AP Photo/Richard Drew) (Photo: Richard Drew, AP)
“Bad break,” is the way Edward Yardeni, chief investment strategist at Yardeni Research, described the global tumult in stock markets around the globe.
“It’s a really cruel summer,” Savita Subramanian, equity and quant strategist at Bank of America Merrill Lynch told clients in a report before the opening bell. “Call it derisking, a flight to quality, a momentum meltdown, or the first signs of a global recession,” but the fact is the past week saw the first pullback of greater than 5% since last October and the worst week since September 2011, she added.
The massive selloff, which kicked into high gear last week when the Dow tumbled more than 1,000 points and sank into official correction territory. Wall Street is still trying to gauge what will stop the landslide and stabilize the battered market, how bad the ultimate decline will be, and when it’s safe to dive back into the market and seek out battered stocks.
The sell-off has been driven by growing fears that China’s economy, the world’s second-biggest and once the engine of world growth, is slowing more than many investors had thought, raising fears that a global economic relapse will ensue, hurting corporate profits for companies in the U.S. and the rest of the globe.
Yardeni sums up the big question facing investors: “Is the latest panic attack likely to be followed by yet another relief rally, or was last week’s stock market rout the beginning of a bear market?” (A drop of 20% or more.)
The small-company Russell 2000 also dipped into correction territory along with the Dow last week.
As an investor it's hard not to panic as stocks continue to plunge. Adam Shell of USA TODAY with five tips on keeping your cool. Michael Monday
Read or Share this story: http://usat.ly/1JfO57D
No comments:
Post a Comment