NEW YORK — The Dow Jones Industrial Average and the S&P 500 fell sharply again Thursday after both indexes on Wednesday logged their largest losses on a percentage basis since Feb. 8.
The S&P 500 has closed lower for five straight days. The Nasdaq declined on Thursday, a day after the tech-heavy index had its biggest percentage drop since June 2016.
Stocks in Asia closed sharply lower on Thursday following the selloff on Wall Street. Tokyo's Nikkei 225 declined 3.9%, and the Shanghai Composite index sank 5.2%. Banks and health care companies are taking some of the worst losses while technology companies are slightly higher after a series of big losses. Stocks had their biggest losses in eight months Wednesday, and tech was the hardest-hit sector. Investors worried that equity markets would have trouble recovering as rising interest rates coincide with uncertainty about how much earnings growth would be hurt by a U.S. trade war with China.
“People fear that it will be harder to snap back if we’re seeing a cyclical top in earnings with those two headwinds, which are not going away,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
The Dow Jones Industrial Average fell 545.91 points, or
2.13 percent, to 25,052.83, the S&P 500 lost 57.31 points,
or 2.06 percent, to 2,728.37 and the Nasdaq Composite
dropped 92.99 points, or 1.25 percent, to 7,329.06.
After hitting an intraday high of 28.84, the CBOE Volatility Index, popularly known as the “fear gauge,” ended the day up 2 points at 24.98, its highest close since Feb. 12.
“We saw a rally this morning, and that ended up being a suckers’ rally. Then you had buy-the-dippers coming in here saying this was too much too fast,” said Dennis Dick, proprietary trader at Bright Trading Llc In Las Vegas.
“Are we out of the woods here? I don’t think so,” he said. “You’re going to see a lot of volatility in the next week or so.”
The energy sector, pressured by a drop in oil prices, was the lead decliner, while insurers were some of the biggest losers in the financial sector a day after powerful Hurricane Michael slammed into Florida.
The S&P’s 11 major sectors all ended the day in the red with only the communications services sector managing a decline of less than 1 percent.
Energy was the biggest loser with a 3.1 percent drop as oil prices hit two-week lows after an industry report showed a bigger-than-expected build in U.S. crude inventories.[O/R]
The financial sector fell 2.9 percent, also hurt by a 2.7 percent drop in bank stocks a day before three of the biggest banks were to report quarterly results.
Wall Street expects S&P 500 companies to report third-quarter earnings growth of 21.3 percent for the third quarter according to I/B/E/S data from Refinitiv.
The technology sector, the biggest loser in Wednesday’s sell-off, closed down 1.3 percent on Thursday.
Stocks had seen some support earlier in the session from U.S. data showing a smaller-than-anticipated rise in consumer prices as it helped ease fears of increasing inflation pressures.
The data helped push U.S. Treasury yields to a one-week low, further soothing equity investors.
But investors still faced a sea of worries, including uncertainty ahead of U.S. midterm congressional elections on Nov. 6, and hawkish comments last week from U.S. Federal Reserve officials.
Declining issues outnumbered advancing ones on the NYSE by a 3.52-to-1 ratio; on Nasdaq, a 2.66-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 62 new lows; the Nasdaq Composite recorded 6 new highs and 291 new lows.
Volume on U.S. exchanges was 11.44 billion shares, its highest level since Feb. and compared with the 7.65 billion-share average for the full session over the last 20 trading days.
Additional reporting by April Joyner, Caroline Valetkevitch in New York, Shreyashi Sanyal in Bengaluru.
Editing by Nick Zieminski and Jonathan Oatis