US stocks dive 2% on growth worries
Wall Street stocks tumbled Thursday, Oct. 9, 2014, losing about two percent in a broad sell-off, as weak economic data from Germany heightened concerns about poor overseas growth. AP
NEW YORK–Wall Street stocks tumbled Thursday, losing about two percent in a broad sell-off, as weak economic data from Germany heightened concerns about poor overseas growth.
At the market close, the Dow Jones Industrial Average stood at 16,659.25, down a heavy 334.97 points (1.97 percent).
The broad-based S&P 500 shed 40.68 (2.07 percent) at 1,928.21, while the tech-rich Nasdaq Composite Index lost 90.26 (2.02 percent) at 4,378.34.
The indices dug deep into negative territory, wiping out gains from Wednesday’s strong rally that had been driven in part by Federal Reserve policy meeting minutes suggesting the US central bank was willing to keep easy money flowing for some time to come.
The S&P VIX index that measures volatility, known as the “fear index,” jumped more than 24 percent to 18.76, its highest reading since February.
Negative news came from the eurozone, including trade data showing Germany suffered a massive 5.8 percent drop in exports in August. Leading German think tanks also slashed their growth forecasts for the eurozone’s largest economy.
While US economic data has generally improved, traders are worrying about a slowdown in Europe and Asia that is weighing on the global economy.
“Overriding everything is just the concern that European growth is weak and getting weaker,” said William Lynch of Hinsdale Associates.
Aluminum producer Alcoa unofficially kicked off earnings season after the market closed Wednesday with third-quarter earnings of 31 cents per share, eight cents higher than expected. On Thursday, Alcoa shares fell 4.2 percent in the sell-off.
PepsiCo slipped 0.4 percent after raising its outlook for 2014 adjusted earnings growth to nine percent from eight percent and posted third-quarter profits that bested expectations.
Apple added 0.2 percent as activist investor Carl Icahn called for the technology giant to accelerate its share buyback plan, saying shares were “dramatically undervalued.”
Amazon fell 2.3 percent after The Wall Street Journal reported the online retailer would open its first brick-and-mortar store in New York ahead of the year-end holiday season.
Gap plummeted 12.5 percent after the clothing retailer announced it had appointed Art Peck, head of its growth and digital division, to replace chief executive Glenn Murphy, who will step down in February.
Botox-maker Allergan fell 1.6 percent as it raised its forecast for third-quarter earnings to $1.76-$1.78 per share from $1.44-$1.47 previously. The company said the results show the “vast value gap” between its worth and an unsolicited takeover offer from Valeant Pharmaceuticals, down 2.8 percent.
Bond prices were flat. The yield on the 10-year US Treasury was unchanged at 2.33 percent from Wednesday, while the 30-year held steady at 3.06 percent. Bond prices and yields move inversely.
