By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The Nasdaq Composite suffered its
worst day since late 2011 on Thursday as investors fled biotech,
Internet and other high-growth stocks, the sectors that had led the
last leg up of the maturing bull market.
The Nasdaq Composite (RIXF) dropped 129.79 points, or 3.1%, its
worst one-day percentage decline since November 2011. The Nasdaq
Biotech index (NBI) as well as iShares Nasdaq Biotechnology ETF
(IBB) dropped 5.6%.
The S&P 500 (SPX) ended the day 39.10 points, or 2.1%, lower
at 1,833.08, falling below its 50-day moving average and
dangerously close to crossing its 100-day moving average. Selling
was so indiscriminate that only about 2% of 500 members of the
index closed higher.
The Dow Jones Industrial Average (DJI) fell 266.96 points, or
1.6%, to 16,170.22, its worst one-day percentage drop in more than
two months.
The Russell 2000 index of small-cap stocks (RUT) fell 32.26
points, or 2.8%, to 1,127.66. Panic-selling was evident from the
jump in the volatility. The CBOE Vix index (VIX) of implied
volatility on the S&P 500 jumped 16% to nearly 16.
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action.
Uri Landesman, president of hedge fund Platinum Partners, told
MarketWatch today's slump is only the beginning:
"Techs and biotechs really haven't cracked yet. I think it'll
happen and people will be surprised how much they can really go
down. So if they crack, it could get a lot worse. It wouldn't shock
me if July Fourth weekend we wake up to a 1600 S&P 500,"
Landesman said.
Stocks began the day lower after downbeat trade data from China
rattled nerves, feeding concerns about slowing global demand.
Before the opening bell, investors gave a tepid and short-lived
welcome to a jobless claims report. New application for
unemployment benefits dropped to the lowest level in almost seven
years, suggesting that the U.S. labor market might be experiencing
a spring revival.
Quincy Krosby, market strategist at Prudential Financial, said
markets are adjusting to having to think for themselves as the
Federal Reserve continues the taper process.
"Earnings guidance is crucial for investors as we work our way
through the earnings season. The market is trying to find the
appropriate equilibrium between valuations, revenue growth and
guidance," Krosby said.
Retailers report mixed earnings, Ally slips on debut
Internet and software stocks retreated Thursday, as shares of
Pandora Media Inc. (P) , Facebook Inc. (FB) , Yahoo Inc. (YHOO) and
Workday (WDAY) led the tech sector in joining a broad market
selloff.
Bed, Bath & Beyond Inc.(BBBY) shares fell 6.2% after the
houseware retailer's forecast for the current quarter fell short of
forecasts, and it posted a profit and revenue decline for the
fiscal fourth quarter.
Family Dollar Stores Inc.(FDO) shares were down 3.2% after the
discount-price retailer posted a fiscal second-quarter profit of 80
cents a share, which fell short of expectations. Revenue also
fell.
Rite Aid Corp.(RAD) shares rose 8.4% after fourth-quarter
adjusted earnings per share topped estimates.
Costco Wholesale Corp.(COST) closed 0.9% down after March
comparable sales rose 5%, beating forecasts.
Shares of Imperva Inc. (IMPV) fell 44%, after the
network-security company cut its outlook.
Ally Financial Inc.(ALLY) made a disappointing market debut on
Thursday, in what was the biggest U.S.-listed initial public
offering of the year. Shares fell 4.1% to $23.98. The U.S. Treasury
Department agreed to sell 95 million shares at $25 a piece, raising
about $2.38 billion and reducing its stake in the company.
Gold jumps; Asia stocks rise
Asian markets brushed aside ugly trade data, after China
announced a plan to widen market access for overseas investors and
allow for direct stock-trading between Hong Kong and Shanghai.
European stocks closed lower after the selloff took hold on Wall
Street.
Gold (GCM4) prices closed at their highest level in nearly three
weeks. Oil (CLK4) ended lower for the first time in three sessions.
The dollar (DXY) fell against the Japanese yen.
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