U.S. stocks dropped on Thursday, reclaiming a large chunk of prior-day gains, as investors bypassed U.S. corporate earnings and economic reports to focus on global concerns.
“To some extent we’ve lost the optimism that drove the markets higher over the course of the year, whether it’s worry about the impact of people dying of the latest contagion, whether worry about what will happen when the Fed is no longer pumping money into the economy, or Europe and the slowing there,” said Bruce McCain, chief investment strategist at Key Private Bank.
The CBOE Volatility Index, a measure of investor uncertainty, rose 12 percent to 16.96.
Gap fell sharply after the retailer tallied disappointing sales in September and said its chief executive officer would depart; PepsiCo gained after hiking its outlook, and Apple rose after Carl Icahn called on the technology company to increase its share buybacks.
The market’s decline “certainly isn’t any of the U.S. news; jobless claims continue to point to a sturdy labor market,” Mark Luschini, chief investment strategist at Janney Montgomery Scott, said of the number of those filing for jobless benefits, which declined last week, with the four-month average hitting an eight-year low.
Separately, wholesale inventories rose 0.7 percent in August, compared to expectations of a 0.3 percent gain.
“We need to wipe out some valuation excess to de-rate to a level that is more indicative of this two-speed global economy, where the U.S. looks good but the rest of the world looks suspiciously weak,” Luschini said.
The S&P 500 fell 26.16 points, or 1.4 percent, to 1,942.73, with energy slammed the most and all 10 of its main industry groups in the red.
The Nasdaq declined 54.18 points, or 1.2 percent, to 4,413.42.
For every share rising, five fell on the New York Stock Exchange, where 305 million shares traded as of 12 p.m. Eastern. Composite volume approached 1.6 billion.
The yield on the 10-year Treasury note used to figure mortgage rates and other consumer loans reversed higher, up a basis point to 2.334 percent.
“The 10-year Treasury yield is below important long-term support near 2.33 percent, which it needs to hold on a consecutive weekly closing basis, according to our work, in order to prevent a test of secondary support in the 2.00 percent -2.10 percent area,” Katie Stockton, chief technical strategist at BTIG, wrote in a morning note, issued as the yield fell as low as 2.2799 percent, according to data provided by FactSet.
The dollar also reversed course, gaining against the currencies of major U.S. trading partners.
On the New York Mercantile Exchange, commodities were mixed, with gold futures for December delivery rising $18.90, or 1.6 percent, to $1,224.90 an ounce, and the November crude-oil contract down 63 cents, or 0.7 percent, to $86.68 a barrel.
On Wednesday, stocks rallied as the Federal Reserve signaled it would likely hold interest rates near zero on worries that a slowdown in the global economy and the stronger dollar could dampen the U.S. recovery.
—By Kate Gibson
Coming Up This Week:
10:30 a.m. St. Louis Fed President James Bullard, opening remarks at St. Louis Fed conference
10:30 a.m. Oil inventories
11:00 a.m. ECB President Mario Draghi at Brookings, DC
11:00 a.m. Fed Vice Chair Stanley Fischer at Brookings on ECB
1:00 p.m. 30-year bond auction
1:10 p.m. Fed Gov. Daniel Tarullo on regulatory reform
1:15 p.m. Richmond Fed President Jeffrey Lacker on growth and the labor markets
1:30 p.m. Fed’s Fischer at IMF on global economy
3:40 p.m. San Francisco Fed President John Williams on economic outlook
IMF fall meeting
8:30 a.m. Import prices
9:00 a.m. Philadelphia Fed’s Plosser on monetary policy
1:00 p.m. Kansas City Fed President Esther George on economy
2:00 p.m. Richmond Fed’s President Jeffery Lacker on the economy
2:00 p.m. Treasury budget