By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
FANG stocks get hit; Dow tumbles over 300 points
U.S. stocks tumbled Monday morning to their lowest level in 22
months as a fresh drop in oil prices amid continuing fears of
economic slowdown pushed investors to the perceived safety of
government bonds and gold.
The S&P 500 tumbled 36 points, or 1.9%, to 1,844, its lowest
level since April 2014. The Dow Jones Industrial Average skidded
312 points, or 1.9%, at 15,891, also a 20-month low.
As the main stock indexes broke below their Jan. 20 lows,
success or failure in testing those support levels "could indicate
if we are really heading into a big bear market or nearing the end
of a big correction within a bull market," said Colin Cieszynski,
chief market strategist at CMC Markets, in emailed comments.
While stocks slumped, demand for so-called haven assets surged,
pushing gold prices to a nearly four-month high,
(http://www.marketwatch.com/story/gold-jumps-to-near-4-month-high-as-investors-turn-to-safety-2016-02-08)
and Treasury yields , which move inversely to prices, to a 12-month
low.
The Nasdaq Composite logged the heaviest losses, down 108
points, or 2.5%, to 4,255, as the theme of a collapse in the
so-called FANG stocks continued for a second straight session.
Those stocks are Facebook Inc. (FB), Amazon.com Inc. (AMZN)
Netflix Inc. (NFLX) and Google parent Alphabet Inc. (GOOGL)
Facebook shares fell 2.3% Monday morning, while Twitter Inc.
(TWTR) tumbled 4.8% to an all-time low. Alphabet was down 1.2% and
Netflix inched higher by 0.6%.
"Is the market throwing out the baby with the bath water?" said
James Meyer, chief investment officer at Tower Bridge Advisors,
referring the "rapid fall in prices for the high flying tech and
biotech names that have been leading the market for the past 12
months."
"The former leaders of the previous bull cycle are the ones that
get taken to the woodshed in the last phase of the downturn," Meyer
said.
As oil prices sank again
(http://www.marketwatch.com/story/oil-pops-above-31-a-barrel-as-traders-keep-close-watch-on-the-dollar-2016-02-08),
amid continuing fears about the global oversupply of crude, the
energy sector was the worst performer on the S&P 500, down 2.7%
on the day. Energy names like Chesapeake Energy Corp. (CHK) and
Williams Companies(WMB) leading the decliners, down 33% and 23.5%
respectively.
Financials were the second-worst performing sector on the
S&P 500, down 2.5%, as ultra-low interest rates and widening
credit spreads have fueled concerns about banks' balance sheets.
Financial giants like Goldman Sachs Group (GS) and Visa Inc. (V)
were leading the Dow industrials losses.
Also read:Why a selloff in European banks is ominous
(http://www.marketwatch.com/story/why-a-selloff-in-european-banks-is-ominous-2016-02-07)
Monday's losses came on the heels of the biggest weekly drop in
a month for U.S. equities
(http://www.marketwatch.com/story/wall-street-gets-the-jitters-ahead-of-key-jobs-data-2016-02-05).
The Nasdaq Composite fell 3.3% on Friday and logged a 5.4% weekly
drop, its biggest in a month,
A mixed U.S. jobs report and weak oil prices played a role in
last week's dives, which included a 1.6% weekly drop for the Dow
industrials and a 3.1% slide for the S&P 500 . Oil prices lost
more than 8% last week
(http://www.marketwatch.com/story/crude-prices-steady-as-a-weak-dollar-lends-support-2016-02-05).
"While [Friday's jobs report] may previously have supported
markets as delayed tightening means monetary conditions remain
accommodative for longer, global growth fears appear to have
surpassed rate hikes as being the biggest threat for investors,"
said Craig Erlam, senior market analyst at Oanda.
Investors will be looking ahead to comments from Federal Reserve
Chairwoman Janet Yellen on Wednesday and Thursday, when she
testifies to Congress about the economy and monetary policy. Last
week's jobs data prompted questions about the Fed's future
interest-rate policy, as Friday's data showed slower jobs growth,
but decent wage inflation.
There is no data scheduled for Monday, nor any Fed speeches. The
week will end with retail sales data.
Read:Why consumers may keep economy from sinking
(http://www.marketwatch.com/story/why-consumers-may-keep-economy-from-sinking-2016-02-07)
Stocks to watch
Hasbro Inc. (HAS) gained 1.5% after the company beat earnings
and revenue estimates, boosted by sales of Star Wars toys.
BioCryst Pharmaceuticals Inc. (BCRX) shares slumped 67% after
the pharmaceutical company reported failure in a study for a new
drug to treat a rare genetic condition
(http://www.marketwatch.com/story/biocryst-fails-in-study-for-new-drug-to-treat-rare-genetic-condition-2016-02-08).
Shares of LeapFrog Enterprises Inc. (LF) fell modestly after
VTech Holdings Inc. (0303.HK) said it would buy the struggling
educational toy maker for $72 million in cash
(http://www.marketwatch.com/story/struggling-leapfrog-bought-by-vtech-for-72-million-2016-02-07).
Apollo Education Group Inc. (APOL) shares jumped 24%after the
company said it would be taken private in a $1.1 billion deal
(http://www.marketwatch.com/story/apollo-education-group-to-be-taken-private-2016-02-08).
Read:Disney, Coca-Cola headline consumer-heavy earnings week
(http://www.marketwatch.com/story/disney-coca-cola-headline-consumer-heavy-earnings-week-2016-02-07)
Other markets
European markets also tumbled, with the Stoxx Europe 600 index
dropping to a 15-month low
(http://www.marketwatch.com/story/european-stocks-drop-to-15-month-low-2016-02-08).
The Nikkei 225 index
(http://www.marketwatch.com/story/japan-australia-stocks-start-the-day-down-on-fed-uncertainty-2016-02-07)
closed up 1%, boosted by upbeat earnings, while many other markets
in Asia were closed for the Lunar New Year holiday. See: When are
Chinese markets closed for holiday?
(http://www.marketwatch.com/story/when-is-chinas-stock-market-closed-for-lunar-new-year-2016-02-05)
Data over the weekend showed China's foreign currency reserves
fell by $99.469 billion in January, hitting the lowest level in
more than three years
(http://www.marketwatch.com/story/chinas-foreign-currency-reserves-drop-9947-bln-2016-02-06).
The dollar
(http://www.marketwatch.com/story/dollar-rises-as-tokyo-stocks-recover-2016-02-08)
pulled back against its major rivals.
(END) Dow Jones Newswires
February 08, 2016 10:47 ET (15:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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