After moving sharply higher over the course of the previous session, stocks showed a substantial move back to the downside during trading on Wednesday. With the pullback on the day, the major averages largely offset yesterday's strong gains.
The major averages saw continued weakness going into the close, ending the session at or near their worst levels of the day. The Dow plunged 217.23 points or 1.2 percent to 17,711.12, the Nasdaq slumped 49.19 points or 1 percent to 4,760.69 and the S&P 500 tumbled 19.93 points or 1 percent to 2,064.46.
The weakness on Wall Street was partly due to profit taking, as traders cashed in on the rally seen in the previous session.
The Dow and the S&P 500 posted their biggest one-day percentage gains in two months on Tuesday amid a rebound by most commodities prices.
Disappointing quarterly results from Disney (DIS) also weighed on the markets, with the entertainment giant slumping by 4 percent on the day.
After the close of trading on Tuesday, Disney reported second quarter earnings and revenues that came in below analyst estimates, as weakness in its television division offset its recent box office success.
The company also announced a $147 million charge in connection with the cancellation of its Infinity video game line.
Office supplies retailers Staples (SPLS) and Office Depot (ODP) also came under pressure after terminating their merger agreement amid opposition from the Federal Trade Commission.
Staples, which must pay Office Depot a $250 million break-up fee, also terminated its agreement to sell more than $550 million in large contract business and related assets to Essendant.
The focus on corporate news came amid another quiet day on the U.S. economic front, with traders looking ahead to the release of closely watched reports on retail sales and producer prices on Friday.
Sector News
Biotechnology stocks moved sharply lower over the course of the trading session, dragging the NYSE Arca Biotechnology Index down by 3.1 percent.
Celldex Therapeutics (CLDX), Alnylam Pharmaceuticals (ALNY), and Vertex (VRTX) turned in some of the biotech sector's worst performances on the day.
Significant weakness was also visible among commercial real estate stocks, as reflected by the 2.2 percent drop by the Morgan Stanley REIT Index. The index pulled back after reaching its highest closing level in over a year on Tuesday.
The steep losses by Staples and Office Depot also weighed on the retail sector along with Macy's (M), which fell sharply after reporting weaker than expected first quarter revenues and lowering its guidance.
Transportation, health care, and brokerage stocks also moved notably lower, while gold stocks bucked the downtrend amid an increase by the price of the precious metal.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index slumped by 0.9 percent.
The major European markets also finished the day mixed. While the U.K.'s FTSE 100 Index ticked up by 0.1 percent, the French CAC 40 Index fell by 0.5 percent and the German DAX Index slid by 0.7 percent.
In the bond market, treasuries moved modestly higher in reaction to the results of a ten-year note auction. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.3 basis points to 1.737 percent.
Looking Ahead
Following several quiet days on the U.S. economic front, trading on Thursday may be impacted by reports on weekly jobless claims and import and export prices.
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