By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Analyst: S&P 500 could be about to start a technical
correction
U.S. stocks tanked on Friday as news of stock market regulation
from China triggered a selloff in global equity markets, where
investors were already on the edge due to fears that Greece may
default on its international debt.
Recent gains in European equity markets and high valuations of
U.S. stock indexes also made them vulnerable to a pullback,
according to some analysts.
China's securities regulator tightened rules on margin lending
(http://www.marketwatch.com/story/china-regulators-to-allow-short-selling-by-fund-managers-2015-04-17)while
the country's two stock exchanges said they would make it easier to
bet that stocks will fall in price in an effort to temper the
country's soaring stock markets.
"This is apparently weighing heavily on Chinese index futures,
which is dragging equities lower across the board. Europe is
getting battered now as well," said Craig Erlam, senior market
analyst OANDA. Futures of H-shares, or Chinese stocks listed in
Hong Kong, fell 4% in after-hours trading.
The Dow Jones Industrial Average (DJI) shed more than 250
points, or 1.4%, to 17,851, and the S&P 500 index (SPX) lost 22
points, or 1%, to 2,083, while the Nasdaq Composite (RIXF) was down
70 points, or 1.4%, to 4,935.
The slide in the opening moments of Friday trading followed
similarly bleak action in stock-index futures before the markets
officially opened.
"What we're seeing right now is a combination of panic and
technical levels being wiped out and exacerbating the move lower,"
Erlam noted before stocks began trading.
Also affecting global markets was an outage of Bloomberg
terminals. Traders' access to the terminals went down around the
same time Asian markets closed at about 3:15 a.m. Eastern Time. The
company says it is working to restore access to the Bloomberg
Professional service, the company's key product. Read: Bloomberg
Terminal goes down, traders get up to fun
(http://www.marketwatch.com/story/bloomberg-terminal-goes-down-traders-get-up-to-fun-2015-04-17)
Fears that Greece might be spiraling toward a default also
weighed on investors minds, intensifying global-growth worries.
In economic news, consumer prices
(http://www.marketwatch.com/story/consumer-prices-move-up-in-march-for-second-month-2015-04-17)
rose for the second straight month in March, led by higher gasoline
prices, according to data reported Friday by the Labor Department.
The uptick was mostly in line with expectations.
Also read: Consumer sentiment, leading indicators improve
(http://www.marketwatch.com/story/consumer-sentiment-leading-indicators-improve-2015-04-17)
Correction ahead? A technical analyst told CNBC on Friday that
he expects major global benchmarks to begin correcting over the
next month. "I think the correction has started on the DAX, and the
S&P 500 we are probably on the top today," Yacine Kanoun,
managing director at PivotHunters, a U.K.-based portfolio
management company, said Friday
(http://www.cnbc.com/id/102595532).
Need to Know: There is nothing quite like the smell of stock
correction in the morning
(http://www.marketwatch.com/story/when-sex-isnt-selling-it-might-be-time-to-get-defensive-2015-04-17)
Earnings:General Electric(GE) reported a loss for the first
quarter. Shares were slightly lower. Shares in Honeywell
International Inc.(HON) lost 2.8% even as the company posted higher
profits
(http://www.marketwatch.com/story/honeywell-beats-profit-expectations-but-misses-on-sales-and-cuts-outlook-2015-04-17)
and upped its outlook for the year. Reynolds American Inc.(RAI)
reported a rise in profit
(http://www.marketwatch.com/story/reynolds-american-beats-profit-sales-estimates-2015-04-17)
for the first quarter that beat estimates.
American Express Co.(AXP) posted a 6.5% gain in profit due to
card-member spending. Shares slipped 4.8% after the payment-card
company said
(http://www.marketwatch.com/story/amex-profit-buoyed-by-card-member-spending-2015-04-16-16485228)its
results were hurt by a stronger dollar.
Mattel Inc
(http://www.marketwatch.com/story/amex-profit-buoyed-by-card-member-spending-2015-04-16-16485228).(MAT)
shares rose 1.8% after the toy maker posted a
narrower-than-expected loss for the first quarter.
Advanced Micro Systems Inc.(AMD) shares plunged 15% after the
chip maker posted a wider-fiscal first-quarter loss and weaker
revenue.
Other markets: In Asia, the Nikkei 225 posted a 1.2% drop, while
the Shanghai Composite Index surged 2.2%. European stocks also
slumped on the back of the news from China, with the Stoxx Europe
600 index off 1.4%.
The dollar remained under pressure, while gold prices (CLK5)
pushed higher.
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