By Ellie Ismailidou and Sara Sjolin, MarketWatch

Dow tumbles over 200 points; investors flock to gold, Treasurys

U.S. stocks opened with sharp losses on Thursday, amid a global rout in risk assets led by tumbling oil prices and stress in the banking sector.

The S&P 500 opened 24 points, or 1.3%, lower at 1,827. The Dow Jones Industrial Average was down 216 points, or 1.3%, at 15,698 shortly after the open. Meanwhile, the Nasdaq Composite began the day down 38 points, or 0.9%, at 4,246.

As risk assets got slammed, demand for so-called haven assets like gold and government bonds surged. The 10-year Treasury yield , the Treasury market's benchmark, plunged to an intraday 3 1/2 -year-low, while gold , also considered a safe asset, jumped 3.4% (http://www.marketwatch.com/story/gold-jumps-to-9-month-high-as-investors-flee-to-safe-havens-2016-02-11).

Technical analysts were focusing on the next support levels for the S&P 500, as the index was heading to its lowest closing level since April 2014 but was still above its Jan. 20 intraday low of 1,812.29.

"The market has been very resilient on multiple tests of the intraday low from Jan. 20 of 1,812.29 on the S&P 500. Today will be the most serious test of that intraday support level," said Tim Anderson, managing director at MND Partners.

Strategists called Thursday's selloff a repeat of the same risk-off theme fueled by fears of economic slowdown that has been rattling global markets since the beginning of the year.

"It's a global cocktail that continues to be crafted on a daily basis [including] worries about negative interest rates coupled with pain in the banking sector and falling crude oil signaling deflation," said Michael Antonelli, equity sales trader at R.W Baird & Co.

Investors' pessimism was heightened by testimony by Federal Reserve Chairwoman Janet Yellen, who on Wednesday didn't take the dovish tone investors were hoping for (http://www.marketwatch.com/story/yellen-says-financial-conditions-less-supportive-to-growth-2016-02-10).

On Thursday, Sweden's central bank cut its main interest rate even further below zero (http://www.marketwatch.com/story/sweden-cuts-main-interest-rate-further-below-zero-2016-02-11-54851335) as it sought to hold down the national currency to support a recovery in the inflation rate toward a 2% target.

Financials were leading the S&P 500 losses, down 2.6%, as ultralow interest rates and widening credit spreads have recently fueled widespread worries about banks' balance sheets, sparking a selloff in the banking sector. The SPDR Financial Select Sector exchange-traded fund (XLF) has tumbled 15% year to date, according to Morningstar. Banking giant J.P. Morgan Chase & Co. (JPM) was leading the Dow laggards, down over 4%.

Banks were also leading the carnage in Europe , with Société Générale tumbling 15% following a disappointing fourth-quarter earnings report.

Thursday's moves follow a late-session selloff (http://www.marketwatch.com/story/dow-futures-up-100-points-as-markets-wait-for-yellen-to-speak-2016-02-10) on Wednesday, when the Dow average logged its longest losing streak since late August and the S&P 500 index matched its longest run of losses since November.

More Yellen: Yellen's comments to a congressional hearing Wednesday failed to instill more confidence in the market. The Fed boss acknowledged the outlook for the U.S. economy could be hurt if jitters over global economies and markets persist and signaled the next interest-rate increase may be postponed. However, she didn't take the dovish tone investors were hoping for.

Despite Yellen's middle-of-the-road approach, the market's expectations that more rate hikes are coming in 2016 tumbled Thursday morning.

The December fed-funds futures contract has fully taken out the odds of a rate hike by year-end and the contract table all through 2016 is now beginning to price in a rate cut, according to data from the Lindsey Group.

Read:Bond market, Yellen face off on negative interest rates (http://www.marketwatch.com/story/bond-market-yellen-face-off-on-negative-interest-rates-2016-02-10)

Yellen will return to Capitol Hill on Thursday, when she appears before the Senate Banking Committee at 10 a.m. Eastern Time.

On the U.S. data docket, the number of people who applied for unemployment benefits in early February fell to the lowest level (http://www.marketwatch.com/story/low-jobless-claims-show-no-sign-of-rising-layoffs-2016-02-11)in almost two months, a reassuring sign that few workers are losing their jobs despite a slowdown in hiring.

Greenback falls: The dollar dropped sharply Wednesday after Yellen's comments and continued its descent overnight. It plunged to the lowest level against the yen (http://www.marketwatch.com/story/dollar-slumps-to-lowest-level-against-yen-since-late-2014-2016-02-11) since 2014 on Thursday, sinking to as low as Yen111.01 from Yen113.60 late Wednesday, as the renewed panic sent investors hunting for safety in the yen.

"The fact that dollar/yen fell again sharply into the close with the losses continuing overnight is a really concerning signal, along with gold regaining the upside initiative after previously threatening a correction," said Richard Perry, market analyst at Hantec Markets, in a note.

"The bears remain in control," he added.

Read:The one stock sector you need to fight the bear-market flu (http://www.marketwatch.com/story/the-one-stock-sector-you-need-to-fight-the-spreading-bear-market-virus-2016-02-11)

Oil blues: Falling oil prices were seen as fueling Thursday's global market rout. West Texas Intermediate crude oil slid below $27 a barrel, flirting with its lowest level in nearly 13 years (http://www.marketwatch.com/story/crude-shrugs-off-supply-decline-pushes-below-27-a-barrel-2016-02-11).

This weighed on shares of oil-related companies, which dropped ahead of the bell. Exxon Mobil Corp. (XOM) fell 1.6%, Transocean Ltd. (RIG) lost 3.3%, and ConocoPhillips (COP) shaved off 2.6%.

The Velocity Shares 3X Long Crude ETN (UWTI) sank 6%.

Other movers: Shares of Twitter Inc. (TWTR) lost 4% after the social-media company late Wednesday reported flat user growth for the fourth-quarter (http://www.marketwatch.com/story/twitter-proves-wall-street-critics-were-right-2016-02-10).

On a more upbeat note, Cisco Systems Inc. (CSCO) jumped 8.8% after its second-quarter earnings and revenue, released late Wednesday, beat forecasts (http://www.marketwatch.com/story/cisco-beats-estimates-and-raises-dividend-2016-02-10).

Tesla Motors Inc. (TSLA) gained 8.3% after the luxury electric car maker said it could achieve a net profit (http://www.marketwatch.com/story/tesla-reports-loss-but-says-profit-in-sight-2016-02-10) in the final quarter of 2016.

PepsiCo Inc. (PEP) slipped 1% as the company issued a soft outlook (http://www.marketwatch.com/story/pepsico-profit-up-31-but-outlook-is-soft-2016-02-11).

After the market closes, American International Group Inc. (AIG), Pandora Media Inc. (P) and CBS Corp. (CBSA) are scheduled to release earnings.

Other markets: Hong Kong's Hang Seng Index returned to trading after the Lunar New Year with a 3.9% tumble. That helped drive a selloff at the open in Europe, where banks were hard hit. The Stoxx Europe 600 index was on track for its lowest close since October 2013 (http://www.marketwatch.com/story/european-stocks-knocked-to-lowest-since-2013-as-fear-selling-returns-2016-02-11).

 

(END) Dow Jones Newswires

February 11, 2016 10:08 ET (15:08 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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