Stocks tumble around the world; Dow drops over 2 percent
Stocks tumbled more than 2 percent on Thursday, with the Dow on track for the worst day of 2013, dropping over 300 points on a day when Asian and European markets also plunged.
A day after Federal Reserve Chairman Ben Bernanke hinted the central bank may scale back its asset purchases later this year, the world's markets were in turmoil.
European shares closed deeply in the red across the board with the FTSEurofirst 300 index falling nearly 3 percent. Markets in Asia were slammed, with the Japanese Nikkei closing down nearly 2 percent. South Korea's Kospi and the Shanghai Composite traded near 2013 lows.
As of 12:45 pm EDT, the Dow selloff alone had wiped out about $123.8 billion of investors' capital since Bernanke's comments on Wednesday afternoon.
Despite positive news on the U.S. housing front, higher than expected U.S. jobless numbers added to the gloomy atmosphere on the markets and benchmark Treasury yields were near their highest in almost two years.
(Read More: Market Seems to Have Lost Faith in The Fed)
The Dow Jones Industrial Average fell 322 points, or 2.13 percent in afternoon trading after dropping more than 200 points on Wednesday. All 30 components were in the red, led by Disney and Intel.
The S&P 500 and the Nasdaq were also near session lows. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, briefly spiked above 19, hitting a new high for the year.
All three major averages were back in negative territory for the week, and on track for their fourth-weekly decline in the last five weeks.
All key S&P sectors were sharply in the red. Defensive names have been getting hit the hardest over the last two days, the last two days, with utilities and telecoms down more than 4 percent each.
"Despite the selloff yesterday, you saw the cyclical names holding on that's considered important because it's more indicative of the underlying strength of the economy," noted Quincy Krosby, market strategist at Prudential Financial.
(Read More:Equities Going Higher Despite Fed Taper Talk: Pros)
"We shouldn't be surprised by what the Fed said yesterday—Bernanke had already mentioned this in his speech back in May and we saw an immediate reaction in the bond market," said Krosby. "We haven't had a meaningful correction in the market and if this selloff continues…it doesn't mean the market is going to collapse; it is essentially recalibrating—the road to normal is going to be filled with detours."
Fed policymakers said in a statement Wednesday that the central bank would keep buying $85 billion in bonds a month. But in a press conference, Bernanke said if the economy continues to improve, the central bank could could start winding down its asset-purchasing program towards the end of 2013 and wrap up in 2014.
"The FOMC [Federal Open Market Committee] was more hawkish than we had expected," wrote Goldman Sachs economists Jan Hatzius and Sven Jari Stehn. "Our takeaway is that the risk to our forecast of quantitative easing tapering starting in December has increased."
(Read More: After the Fed—What's the Market's Next Move?)
Bernanke's comments sparked a huge selloff Wednesday, with the Dow closing down more than 200 points. The benchmark 10-year yield continued to rise even further Thursday to 2.469 percent, hitting its highest level since August 2011. Gold prices tumbled to their lowest in more than 2-1/2 years and silver fell more than 6 percent.
European shares closed deeply in the red across the board with the FTSEurofirst 300 index falling nearly 3 percent. Markets in Asia were slammed, with the Japanese Nikkei closing down nearly 2 percent. South Korea's Kospi and the Shanghai Composite traded near 2013 lows.
(Read More:Global Markets Feel the Sting of Fed's Tapering)
Adding to woes in Asia, China's HSBC Flash Purchasing Manager's Index, a preliminary reading of manufacturing activity, fell to a nine-month low in June.
On the economic front, existing home sale jumped 4.2 percent in May to an annual rate of 5.18 million units, rising to its highest level in 3-1/2 years, according to the National Association of Realtors. And factory activity in the mid-Atlantic region rose to 12.5 in June, rebounding from minus 5.2 in the prior month, according to the Philadelphia Federal Reserve Bank, trumping expectations for a reading of minus 2. Any reading above zero indicates expansion in the region's manufacturing.
And a gauge of future economic activity touched its highest level in nearly five years in May, according to the Conference Board.
But traders shrugged off the positive reports.
(Read More: Stock Market Has More Room to Run: Strategist)
Meanwhile, jobless claims jumped 18,000 to a seasonally adjusted 354,000 last week, according to the Labor Department. Economists polled by Reuters had expected a reading of 340,000 last week. The four-week moving average for new claims rose 2,500 to 348,250.
source: Dow drops over 2 percent as stocks tumble around the world - NBC News.com
Stocks tumbled more than 2 percent on Thursday, with the Dow on track for the worst day of 2013, dropping over 300 points on a day when Asian and European markets also plunged.
A day after Federal Reserve Chairman Ben Bernanke hinted the central bank may scale back its asset purchases later this year, the world's markets were in turmoil.
European shares closed deeply in the red across the board with the FTSEurofirst 300 index falling nearly 3 percent. Markets in Asia were slammed, with the Japanese Nikkei closing down nearly 2 percent. South Korea's Kospi and the Shanghai Composite traded near 2013 lows.
As of 12:45 pm EDT, the Dow selloff alone had wiped out about $123.8 billion of investors' capital since Bernanke's comments on Wednesday afternoon.
Despite positive news on the U.S. housing front, higher than expected U.S. jobless numbers added to the gloomy atmosphere on the markets and benchmark Treasury yields were near their highest in almost two years.
(Read More: Market Seems to Have Lost Faith in The Fed)
The Dow Jones Industrial Average fell 322 points, or 2.13 percent in afternoon trading after dropping more than 200 points on Wednesday. All 30 components were in the red, led by Disney and Intel.
The S&P 500 and the Nasdaq were also near session lows. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, briefly spiked above 19, hitting a new high for the year.
All three major averages were back in negative territory for the week, and on track for their fourth-weekly decline in the last five weeks.
All key S&P sectors were sharply in the red. Defensive names have been getting hit the hardest over the last two days, the last two days, with utilities and telecoms down more than 4 percent each.
"Despite the selloff yesterday, you saw the cyclical names holding on that's considered important because it's more indicative of the underlying strength of the economy," noted Quincy Krosby, market strategist at Prudential Financial.
(Read More:Equities Going Higher Despite Fed Taper Talk: Pros)
"We shouldn't be surprised by what the Fed said yesterday—Bernanke had already mentioned this in his speech back in May and we saw an immediate reaction in the bond market," said Krosby. "We haven't had a meaningful correction in the market and if this selloff continues…it doesn't mean the market is going to collapse; it is essentially recalibrating—the road to normal is going to be filled with detours."
Fed policymakers said in a statement Wednesday that the central bank would keep buying $85 billion in bonds a month. But in a press conference, Bernanke said if the economy continues to improve, the central bank could could start winding down its asset-purchasing program towards the end of 2013 and wrap up in 2014.
"The FOMC [Federal Open Market Committee] was more hawkish than we had expected," wrote Goldman Sachs economists Jan Hatzius and Sven Jari Stehn. "Our takeaway is that the risk to our forecast of quantitative easing tapering starting in December has increased."
(Read More: After the Fed—What's the Market's Next Move?)
Bernanke's comments sparked a huge selloff Wednesday, with the Dow closing down more than 200 points. The benchmark 10-year yield continued to rise even further Thursday to 2.469 percent, hitting its highest level since August 2011. Gold prices tumbled to their lowest in more than 2-1/2 years and silver fell more than 6 percent.
European shares closed deeply in the red across the board with the FTSEurofirst 300 index falling nearly 3 percent. Markets in Asia were slammed, with the Japanese Nikkei closing down nearly 2 percent. South Korea's Kospi and the Shanghai Composite traded near 2013 lows.
(Read More:Global Markets Feel the Sting of Fed's Tapering)
Adding to woes in Asia, China's HSBC Flash Purchasing Manager's Index, a preliminary reading of manufacturing activity, fell to a nine-month low in June.
On the economic front, existing home sale jumped 4.2 percent in May to an annual rate of 5.18 million units, rising to its highest level in 3-1/2 years, according to the National Association of Realtors. And factory activity in the mid-Atlantic region rose to 12.5 in June, rebounding from minus 5.2 in the prior month, according to the Philadelphia Federal Reserve Bank, trumping expectations for a reading of minus 2. Any reading above zero indicates expansion in the region's manufacturing.
And a gauge of future economic activity touched its highest level in nearly five years in May, according to the Conference Board.
But traders shrugged off the positive reports.
(Read More: Stock Market Has More Room to Run: Strategist)
Meanwhile, jobless claims jumped 18,000 to a seasonally adjusted 354,000 last week, according to the Labor Department. Economists polled by Reuters had expected a reading of 340,000 last week. The four-week moving average for new claims rose 2,500 to 348,250.
source: Dow drops over 2 percent as stocks tumble around the world - NBC News.com
