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 a confluence of intensifying
Greek default fears and a new stock-market regulation from China
put investors on edge.
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.
Donald Ellenberger, senior portfolio manager at Federated
Investors, said concerns over Greece and its ability to pay its
debt are behind the selloff in risky assets such as equities.
"Investors have piled into German bunds and credit spreads
widened. But it was news from China's regulators that triggered
selling, as a lot of investors were sitting on gains after a run-up
in equity markets," Ellenberger said.
Early morning jitters in China also helped stoke worries.
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.
The Dow Jones Industrial Average (DJI) shed more than 270
points, or 1.5%, to 17,832, and the S&P 500 index (SPX) lost 24
points, or 1.2%, to 2,080, while the Nasdaq Composite (RIXF) was
down 75 points, or 1.5%, to 4,931.
Friday's slump 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,"
said Craig Erlam, senior market analyst OANDA, noting a 6%-10%
correction appears to be on the cards.
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)
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: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.
For more on today's notable movers read Movers & Shakers
column
(http://www.marketwatch.com/story/ge-reynolds-american-honeywell-earnings-in-focus-2015-04-17).
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 1.7%.
Oil futures (CLK5) were under pressure, while gold prices (CLK5)
pushed higher.
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