Dow plunges 335 points in biggest drop since June 2013
Renewed worries about global economic growth, corporate earnings and market valuations propelled U.S. stocks to huge losses Thursday.
The Dow Jones industrial average sank 335 points (2%) to 16,659, the blue chip barometer's biggest drop since a 354 point slide on June 6, 2013. The carnage to broader indexes was just as pronounced, with the Standard & Poors 500 slumping 2% to 1,928, the Nasdaq composite sliding 2% to 4,378 and the small stock Russell 2000 sinking 2.5% to 1,069, sparking fears that selling pressures could linger.
Thursday's losses were a sharp reversal from Wednesday, when the Dow clocked a near 275-point gain - biggest of the year - inspired by the release of Federal Reserve's meeting minutes signaling the central bank intent to keep interest rates low.
All 10 of the S&P's 10 industry sectors were bloodied Thursday.
Energy stocks were particularly hard hit as crude oil prices continued to slide. The S&P Energy sector index was off 3% after benchmark West Texas Intermediate crude oil and Brent crude continued to slide. In after hours trading, West Texas crude was trading below $85 a barrel for the first time since November 2012.
Thursday's Dow slide was its first three-day move of at least 200 points since August 2011, when the nation's AAA-grade debt was downgraded.
"I think the market has simply taken enough body blows that it was ready for a head shot,'' says Jordan Kimmel, chief investment officer at Investview.
Investors headed to safe havens, such as Treasuries. Yields on 10-year notes fell to 2.3%, lowest in nearly 15 months.
European markets erased early gains and ended with a third straight day of losses. Markets in Asia were less settled. Tokyo's Nikkei 225 index fell 0.8%, but Hong Kong's Hang Seng index added 1.2%.
Renewed volatility and jitters appears to have gripped a market looking for direction. "The market swings daily now with bad news about the global economy being bad news and bearish one day and being good news and bullish the next,'' says Edward Yardeni, chief investment strategist at Yardeni Research.
"On the bad days, investors are pessimistic that the Fed and other central banks have any tools left to boost growth. On good days, they hope that they were wrong the day before. If you are confused by all this, you should be," Yardeni says.
With third quarter earnings season underway, corporate profits could be key to the market's direction.
"Investors are in a volatile fog until we get clarity on the earnings front and forward guidance," says Joseph Quinlan, chief market strategist at U.S. Trust. "Until then, the roll coaster ride will continue."
Says Prudential Financial market strategist Quinck Krosby; "Investors need to hear from companies with regard to demand for their goods and services. Ultimately, this should be the best indicator of the depth of the global slowdown.
Investors in Europe were looking ahead to a speech in Washington by European Central Bank chiefe Mario Draghi.
Economic forecasters have cut Germany's growth rate to 1.3% from 1.9% due to weak eurozone and global growth as well as uncertainty over the Ukraine crisis.
The International Monetary Fund cut its outlook for this year and next for global growth, citing weakness in Japan, Latin America and Europe. The IMF expects the global economy will grow 3.3% this year, below what it forecast in July.
Among Thursday's few bright spots: Apple, which neared its all-time $103.74 in early trading before closing up 22 cents to $101.02. Billionaire activist investor Carl Icahn again prodded CEO Tim Cook to shake some cash loose and buy back company shares. Icahn says AAPL stock is undervalued and says shares are worth $203.
Contributing: Ed Brackett, Kim Hjelmgaard, and the Associated Press.