By Ellie Ismailidou and Sara Sjolin, MarketWatch
Dow tumbles over 200 points; investors flock to gold,
Treasurys
U.S. stocks opened with sharp losses on Thursday, amid a global
rout in risk assets led by tumbling oil prices and stress in the
banking sector.
The S&P 500 opened 24 points, or 1.3%, lower at 1,827. The
Dow Jones Industrial Average was down 216 points, or 1.3%, at
15,698 shortly after the open. Meanwhile, the Nasdaq Composite
began the day down 38 points, or 0.9%, at 4,246.
As risk assets got slammed, demand for so-called haven assets
like gold and government bonds surged. The 10-year Treasury yield ,
the Treasury market's benchmark, plunged to an intraday 3 1/2
-year-low, while gold , also considered a safe asset, jumped 3.4%
(http://www.marketwatch.com/story/gold-jumps-to-9-month-high-as-investors-flee-to-safe-havens-2016-02-11).
Technical analysts were focusing on the next support levels for
the S&P 500, as the index was heading to its lowest closing
level since April 2014 but was still above its Jan. 20 intraday low
of 1,812.29.
"The market has been very resilient on multiple tests of the
intraday low from Jan. 20 of 1,812.29 on the S&P 500. Today
will be the most serious test of that intraday support level," said
Tim Anderson, managing director at MND Partners.
Strategists called Thursday's selloff a repeat of the same
risk-off theme fueled by fears of economic slowdown that has been
rattling global markets since the beginning of the year.
"It's a global cocktail that continues to be crafted on a daily
basis [including] worries about negative interest rates coupled
with pain in the banking sector and falling crude oil signaling
deflation," said Michael Antonelli, equity sales trader at R.W
Baird & Co.
Investors' pessimism was heightened by testimony by Federal
Reserve Chairwoman Janet Yellen, who on Wednesday didn't take the
dovish tone investors were hoping for
(http://www.marketwatch.com/story/yellen-says-financial-conditions-less-supportive-to-growth-2016-02-10).
On Thursday, Sweden's central bank cut its main interest rate
even further below zero
(http://www.marketwatch.com/story/sweden-cuts-main-interest-rate-further-below-zero-2016-02-11-54851335)
as it sought to hold down the national currency to support a
recovery in the inflation rate toward a 2% target.
Financials were leading the S&P 500 losses, down 2.6%, as
ultralow interest rates and widening credit spreads have recently
fueled widespread worries about banks' balance sheets, sparking a
selloff in the banking sector. The SPDR Financial Select Sector
exchange-traded fund (XLF) has tumbled 15% year to date, according
to Morningstar. Banking giant J.P. Morgan Chase & Co. (JPM) was
leading the Dow laggards, down over 4%.
Banks were also leading the carnage in Europe , with Société
Générale tumbling 15% following a disappointing fourth-quarter
earnings report.
Thursday's moves follow a late-session selloff
(http://www.marketwatch.com/story/dow-futures-up-100-points-as-markets-wait-for-yellen-to-speak-2016-02-10)
on Wednesday, when the Dow average logged its longest losing streak
since late August and the S&P 500 index matched its longest run
of losses since November.
More Yellen: Yellen's comments to a congressional hearing
Wednesday failed to instill more confidence in the market. The Fed
boss acknowledged the outlook for the U.S. economy could be hurt if
jitters over global economies and markets persist and signaled the
next interest-rate increase may be postponed. However, she didn't
take the dovish tone investors were hoping for.
Despite Yellen's middle-of-the-road approach, the market's
expectations that more rate hikes are coming in 2016 tumbled
Thursday morning.
The December fed-funds futures contract has fully taken out the
odds of a rate hike by year-end and the contract table all through
2016 is now beginning to price in a rate cut, according to data
from the Lindsey Group.
Read:Bond market, Yellen face off on negative interest rates
(http://www.marketwatch.com/story/bond-market-yellen-face-off-on-negative-interest-rates-2016-02-10)
Yellen will return to Capitol Hill on Thursday, when she appears
before the Senate Banking Committee at 10 a.m. Eastern Time.
On the U.S. data docket, the number of people who applied for
unemployment benefits in early February fell to the lowest level
(http://www.marketwatch.com/story/low-jobless-claims-show-no-sign-of-rising-layoffs-2016-02-11)in
almost two months, a reassuring sign that few workers are losing
their jobs despite a slowdown in hiring.
Greenback falls: The dollar dropped sharply Wednesday after
Yellen's comments and continued its descent overnight. It plunged
to the lowest level against the yen
(http://www.marketwatch.com/story/dollar-slumps-to-lowest-level-against-yen-since-late-2014-2016-02-11)
since 2014 on Thursday, sinking to as low as Yen111.01 from
Yen113.60 late Wednesday, as the renewed panic sent investors
hunting for safety in the yen.
"The fact that dollar/yen fell again sharply into the close with
the losses continuing overnight is a really concerning signal,
along with gold regaining the upside initiative after previously
threatening a correction," said Richard Perry, market analyst at
Hantec Markets, in a note.
"The bears remain in control," he added.
Read:The one stock sector you need to fight the bear-market flu
(http://www.marketwatch.com/story/the-one-stock-sector-you-need-to-fight-the-spreading-bear-market-virus-2016-02-11)
Oil blues: Falling oil prices were seen as fueling Thursday's
global market rout. West Texas Intermediate crude oil slid below
$27 a barrel, flirting with its lowest level in nearly 13 years
(http://www.marketwatch.com/story/crude-shrugs-off-supply-decline-pushes-below-27-a-barrel-2016-02-11).
This weighed on shares of oil-related companies, which dropped
ahead of the bell. Exxon Mobil Corp. (XOM) fell 1.6%, Transocean
Ltd. (RIG) lost 3.3%, and ConocoPhillips (COP) shaved off 2.6%.
The Velocity Shares 3X Long Crude ETN (UWTI) sank 6%.
Other movers: Shares of Twitter Inc. (TWTR) lost 4% after the
social-media company late Wednesday reported flat user growth for
the fourth-quarter
(http://www.marketwatch.com/story/twitter-proves-wall-street-critics-were-right-2016-02-10).
On a more upbeat note, Cisco Systems Inc. (CSCO) jumped 8.8%
after its second-quarter earnings and revenue, released late
Wednesday, beat forecasts
(http://www.marketwatch.com/story/cisco-beats-estimates-and-raises-dividend-2016-02-10).
Tesla Motors Inc. (TSLA) gained 8.3% after the luxury electric
car maker said it could achieve a net profit
(http://www.marketwatch.com/story/tesla-reports-loss-but-says-profit-in-sight-2016-02-10)
in the final quarter of 2016.
PepsiCo Inc. (PEP) slipped 1% as the company issued a soft
outlook
(http://www.marketwatch.com/story/pepsico-profit-up-31-but-outlook-is-soft-2016-02-11).
After the market closes, American International Group Inc.
(AIG), Pandora Media Inc. (P) and CBS Corp. (CBSA) are scheduled to
release earnings.
Other markets: Hong Kong's Hang Seng Index returned to trading
after the Lunar New Year with a 3.9% tumble. That helped drive a
selloff at the open in Europe, where banks were hard hit. The Stoxx
Europe 600 index was on track for its lowest close since October
2013
(http://www.marketwatch.com/story/european-stocks-knocked-to-lowest-since-2013-as-fear-selling-returns-2016-02-11).
(END) Dow Jones Newswires
February 11, 2016 10:08 ET (15:08 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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