Stocks off lows but still down on Europe; Financials hit

U.S. stocks recovered after opening sharply lower on Wednesday as a Europe woes and weak economic data weighed heavily on markets.

Financials led declines on the S&P and traded more than 1.5 percent lower, while JPMorgan Chase and Goldman Sachs were among the greatest blue-chip decliners.

In a cumulative move of about 600 points in losses and gains, the Dow Jones Industrial Average came off lows to trade about 100 points lower after falling as much as 369.59 points in the open, or about 2 percent, to below 16,000, with the initial decline led by Intel and Disney. The drop was the Dow’s largest intraday decline since June 30, 2013, when it fell 380 points.

“It’s all about the global economic growth picture,” said Art Hogan, chief market strategist at Wunderlich Securities.

He noted that the fallout in inversion deals was the most recent factor, while the declining oil prices, decline of the German 10-year bond yield and tensions between Russia and Ukraine were all continuing concerns.

Read More Euro zone crisis 2.0? Greek stocks tank

Markets in Greece, Portugal, Italy, France, Germany and Spain were all down more than 10 percent from their most recent highs.

Check what European markets are doing here.

The U.S. 10-year Treasury note yield dipped below 2 percent for the first time since May 2013.

“I think this is just a correction,” Randy Frederick, managing director of trading and derivatives at Charles Schwab, said. “I’m a long ways from saying we’re heading into a bear market.”

“The only good stuff is the earnings, but that’s backward looking,” he said. “We’re going to have a pretty solid earnings season.”

He added that the pullback would likely cause the Fed to postpone an interest rate hike and that low rates were pressuring financial institutions’ profit margins.

Getty Images Trader on the floor of the New York Stock Exchange.

Getty Images
Trader on the floor of the New York Stock Exchange.

Dow futures lost more than 150 points ahead of the open. Overall, U.S. stock index futures lost about 1 percent as investors were unnerved by word of another Ebola case diagnosed in the U.S., along with a more than 7 percent drop in the Greek markets that drove a flight to safety in German bunds, with the 10-year bond trading below 0.8 percent.

Read More Greek bond yields pass 7% as worries return

Weak economic data also weighed on investor sentiment. Business inventories rose less than expected in August, and U.S. retail sales fell 0.3 percent in September, slightly more than the expected 0.2 percent decline. The producer price index for September fell 0.1 percent as opposed to expectations of a 0.1 percent gain.

Read More Greek PM wins confidence vote in parliament

Meanwhile, German Bund yields fell to a record low on Wednesday as worries over a deteriorating euro zone economic outlook, fed by another credit rating blow for France, and “free falling” inflation expectations dominated the market.

U.S. stocks mostly advanced on Tuesday with the S&P 500 and Nasdaq Composite halting their worst three-day rout since 2011 as investors considered a mixed set of earnings from JPMorgan Chase, Citigroup and Wells Fargo. Intel released positive after-the-bell results and shares of the company gained more than 2 percent in late trading.

The Federal Reserve’s Beige Book report, an indicator on the state of the U.S. economy, is released at 2p.m. ET.

Earnings are expected from American Express, eBay and Netflix after the bell. Prior to the start of trading Bank of America and Blackrock posted better-than-expected results.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 16126.00
-189.19 -1.16%
S&P 500 S&P 500 Index 1854.96
-22.74 -1.21%
NASDAQ Nasdaq Composite Index 4183.53
-43.64 -1.03%

The S&P 500 fell 40 points, or 2.1 percent, to 1,838, with financials the hardest hit as all 10 sectors declined.

The Nasdaq dropped 87 points, or 2 percent, at 4,140.

Eight stocks declined for every advancer on the New York Stock Exchange in the open, with an exchange volume of 114 million and a composite volume of 413 million.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 26, up about 16 percent.

Crude oil futures were down 18 cents at $81.61 on the New York Mercantile Exchange, with gold up $1.60 at $1,235.80 as of 9:49 a.m. ET.

On tap this week:

Wednesday

Earnings: eBay, Netflix

2 p.m.: Federal Reserve’s Beige Book

Thursday

Earnings: Goldman Sachs Group, Google

8:30 a.m.: Weekly jobless claims for week ending Oct. 11

9:15 a.m.: Industrial production for September

10 a.m.: Home Builders Index for October

10 a.m.: Philly Fed

Friday

Earnings: General Electric, Morgan Stanley

8:30 a.m.: Housing starts for September

9:55 a.m.: Consumer sentiment for October

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