By William Watts, MarketWatch , Ryan Vlastelica
S&P 500 on track for sixth straight daily decline
U.S. stocks fell in a volatile session on Thursday, with Wall
Street extending a multiday decline and adding to the losses
incurred in the worst session for the major averages in months as
investors continued to fret over rising bond yields and the
prospect of higher interest rates.
Shares fell globally, with steep losses in both Asia and Europe
(http://www.marketwatch.com/story/global-markets-tumble-us-stock-futures-point-to-continued-selloff-on-wall-street-2018-10-11).
Tech stocks were lower in premarket trading, while energy shares
could also come under pressure as oil prices sink.
What are major benchmarks doing?
The Dow Jones Industrial Average fell 170 points, or 0.7%, to
25,434. More than 20 of the blue-chip average's 30 components were
in negative territory.
The S&P 500 lost 19 points to 2,763, a decline of 0.7%. The
benchmark index was on track for its sixth straight daily decline,
its longest losing streak since a nine-day decline that ended in
November 2016. Nine of the 11 primary S&P 500 sectors were
lower.
The Nasdaq Composite Index fell 23 points, or 0.3%, to
7,399.
All three fluctuated between slight gains and losses in the
first hour of trading, though they subsequently turned decisively
lower.
On Wednesday, both the Dow and the S&P suffered their
biggest one-day drop since February, while the Nasdaq had its
biggest slump since June 2016. The decline took the major indexes
below key levels, which could be a catalyst for additional selling
ahead. Both the Dow and the S&P closed below their 50-day
moving averages, a closely watched metric for short-term momentum
trends. This was the first time both have ended below this level
since July.
Meanwhile, both the Nasdaq and the Russell 2000 ended below
their 200-day moving averages on Thursday. This was the first time
the Russell has done so since August 2017, and the first time the
Nasdaq has ended below this crucial level for long-term momentum
since June 2016.
See:Why the stock market tumbled Wednesday, ushering in its
worst start to a quarter in about 2 years
(http://www.marketwatch.com/story/why-the-stock-market-tumbled-wednesday-ushering-in-its-worst-start-to-a-quarter-in-about-2-years-2018-10-10)
At current levels, the Dow is 5.7% below its intraday record and
it remains up 2.8% for 2018. The S&P is up 3.4% year to date,
and is 6% under its record. The Nasdaq has gained 7.1% in 2018, but
it is 9.1% under record levels.
The Russell 2000 index of small-capitalization shares is up 2.6%
in 2018, but at its low of the session it fell more than 10% below
its record. Should it close with a drop of that magnitude from its
peak, the index would be in correction territory.
What's driving the market?
Investors have pinned the selloff on a variety of factors,
including a sudden rise in long-dated interest rates since late
September. A bond-market selloff saw the yield on the 10-year U.S.
Treasury top 3.26% early Tuesday for the first time since April
2011.
Higher yields raise borrowing costs for corporations. Higher
yields can also offer competition to equities, luring investors
away from stocks. Market turmoil, however, appeared to spark haven
demand for U.S. paper, with the yield on the 10-year note down more
than 6 basis points Thursday to 3.158%.
President Donald Trump stepped up his criticism of the Fed late
Wednesday
(http://www.marketwatch.com/story/trump-says-the-fed-has-gone-crazy-after-the-dow-tumbles-830-points-in-one-day-2018-10-10),
blaming the central bank's rate-hiking efforts for the stock-market
weakness. Some analysts argue the Fed's expected rate path is
overly aggressive, while others contend strong underlying economic
fundamentals justify the central bank's outlook.
Check out:What Trump's tirade against 'loco' Fed means for the
markets
(http://www.marketwatch.com/story/what-trumps-tirade-against-loco-fed-means-for-the-markets-2018-10-11)
Continuing trade tensions with China and concerns about global
growth have also been cited as factors behind the equity market's
downturn.
Read:Tech stocks plunge because investors are nervous--here are
3 reasons why
(http://www.marketwatch.com/story/tech-stocks-plunge-because-investors-are-nervous-here-are-3-reasons-why-2018-10-10)
In the latest economic data, jobless claims rose by 7,000 in the
latest week, although they remain near multidecade lows.
Separately, the consumer-price index rose 0.1% in September. Core
CPI, which excludes food and energy, rose by the same amount.
What are analysts saying
The market losses are "a reaction from investors finally
realizing we are in a higher interest rate environment, and given
the elevated level of stocks, market participants were likely
looking for a reason to sell," said Charlie Ripley, senior
investment strategist for Allianz Investment Management. "Higher
interest rates typically bring on tighter financial conditions
which could dampen growth going forward and equity markets are
reacting to that."
He added, "we are witnessing the repercussions in the markets as
the Fed takes the punch bowl away from the party."
Read:As stocks slide, investors see turn to a 'defensive market'
(http://www.marketwatch.com/story/as-stocks-slide-investors-see-turn-to-a-defensive-market-2018-10-05)
Also:As stocks sell off, analysts debate whether the recent
record was a market top
(http://www.marketwatch.com/story/as-stocks-sell-off-analysts-debate-whether-the-recent-record-was-a-market-top-2018-10-09)
What stocks are in focus?
Investors will be watching formerly highflying growth stocks for
further signs of weakness. Shares of Amazon.com Inc. (AMZN) fell
2.9%. The e-commerce giant has lost nearly 10% thus far this week,
and it has dropped in seven of the past eight sessions.
Google parent Alphabet Inc. (GOOGL) (GOOGL) lost 0.4% and Apple
Inc.(AAPL) lost 0.4%.
Shares of Walgreens Boost Alliance Inc. (WBA) rose 1% after the
drugstore chain reported its quarterly results
(http://www.marketwatch.com/story/walgreens-stock-slumps-after-profit-beats-expectations-but-sales-came-up-short-2018-10-11).
Delta Air Lines Inc. (DAL) rose 4% after the company reported
third-quarter results that beat expectations
(http://www.marketwatch.com/story/delta-airs-stock-climbs-after-profit-rises-beats-expectations-2018-10-11).
Shares of L Brands Inc.(LB) gained 9.6% after the Victoria's
Secret parent reported September sales that rose from a year ago
(http://www.marketwatch.com/story/l-brands-pursues-all-alternatives-for-la-senza-and-reports-monthly-sales-stock-surges-2018-10-11)
and said it was pursuing "all alternatives" for its La Senza
business.
See:These stocks in the Dow Jones Industrial Average, S&P
500 and Nasdaq declined the most Wednesday
(http://www.marketwatch.com/story/these-stocks-in-the-dow-jones-industrial-average-sp-500-and-nasdaq-declined-the-most-today-2018-10-10)
Compugen Ltd. (CGEN) gained 3.1% after Bristol-Myers Squibb
Co.(BMY) said it would make a $12 million equity investment in the
company
(http://www.marketwatch.com/story/compugens-stock-shoots-up-after-bristol-myers-to-pay-52-premium-for-equity-stake-2018-10-11),
as part of a collaboration on a cancer treatment. Shares of Bristol
lost 2.6%.
Shares of electric auto maker Tesla Inc. (TSLA) may be in focus
after Chief Executive Elon Musk denied a report late Wednesday
(http://www.marketwatch.com/story/elon-musk-denies-james-murdoch-is-favorite-to-become-tesla-chairman-2018-10-10)
that James Murdoch is the "favorite" candidate to replace him as
chairman of the company. The stock fell 1.9%.
(END) Dow Jones Newswires
October 11, 2018 11:05 ET (15:05 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.