By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
FANG stocks see further rout, financials sell off
U.S. stocks tumbled Monday, with the S&P 500 on track for
its lowest close in 22 months as a fresh drop in oil prices amid
continuing fears of economic slowdown sparked a global
flight-to-quality.
The S&P 500 tumbled 37 points, or 2%, to 1,842. If the index
closes at that level, it would mark its lowest settlement since
April 2014. The S&P remains above its Jan. 20 intraday low of
1812.29.
The Dow Jones Industrial Average skidded 340 points, or 2%, to
15,866, its lowest level since its Jan. 20 closing low of
15,766.74.
Success or failure in testing the Jan. 20 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 112
points, or 2.6%, to 4,251, 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 4% Monday morning, while Twitter Inc.
(TWTR) tumbled 4% to an all-time low. Alphabet was down 1.7% and
Netflix was unchanged.
"Is the market throwing out the baby with the bath water?" said
James Meyer, chief investment officer at Tower Bridge Advisors,
referring to the "rapid fall in prices for the highflying 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 got hit, down 1.8% on the day. Energy names like
Chesapeake Energy Corp. (CHK) and Williams Companies(WMB) were
leading the decliners, down 51% and 23% respectively.
Financials were the worst performing sector on the S&P 500,
down 3%, as ultralow 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 1.4% 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 25% 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 11:20 ET (16:20 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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