By Ellie Ismailidou and Sara Sjolin, MarketWatch
Financials crumble; investors flock to gold, Treasurys
U.S. stocks were mired in the red Thursday, sinking amid a
global rout in risk assets led by tumbling oil prices and stress in
the banking sector.
Testimony from Federal Reserve Chairwoman Janet
Yellen--continuing a second day of hearings to explain the state of
the U.S. economy in front of Capitol Hill--wasn't helping.
The S&P 500 was down 35 points, or 1.9%, lower at 1,816, on
track for its lowest closing levels in 22 months. The Dow Jones
Industrial Average was down 360 points, or 2.3%, at 15,554, weighed
by a nearly 10% drop in Boeing Company (BA). Meanwhile, the Nasdaq
Composite was down 54 points, or 1.3%, at 4,229.
Also read:Stock market live blog: Global equity rout
intensifies; yields plunge, yen soars
(http://blogs.marketwatch.com/thetell/2016/02/11/stock-market-live-blog-global-equity-rout-intensifies-yields-plunge-yen-soars/#wysiwygEditor)
The global stock rout started overnight and deepened in U.S.
morning trade as Federal Reserve Chairwoman Janet Yellen testified
before the Senate Banking Committee
(http://blogs.marketwatch.com/capitolreport/2016/02/11/live-video-and-updates-of-janet-yellens-appearance-in-senate-committee/).
The Fed chief defended the central bank's December rate
increase, claiming it was designed to diminish accommodation "by a
modest amount", repeating many of her views expressed in her
testimony to the House Financial Services on Wednesday
(http://www.marketwatch.com/story/yellen-says-financial-conditions-less-supportive-to-growth-2016-02-10).
On Thursday, Yellen added that she didn't want to take negative
interest rates "off the table" as a policy tool. Yellen said the
Fed is "taking a look at them again" to be prepared if the Fed
needs to assist the economy.
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)
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 a 3 1/2 -year-low
(http://www.marketwatch.com/story/treasury-yields-plunge-to-lowest-level-since-august-2012-2016-02-11),
while gold , also considered a safe asset, soared to a one-year
high
(http://www.marketwatch.com/story/gold-jumps-to-1-year-high-as-global-market-rout-spurs-safe-haven-buying-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 index briefly tumbled to a session low of 1,813, trading
less than a point above that significant support level, which has
been described
(http://www.marketwatch.com/story/dow-futures-drop-200-points-setting-wall-street-up-for-an-ugly-start-2016-02-08)
as a "significant short-term technical formation" after which there
is "a downside pattern" that makes the chances of reversal much
slimmer.
"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, on Thursday.
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.
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 3.1%, 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 giants Goldman Sachs Group, Inc. (GS) and
J.P. Morgan Chase & Co. (JPM) were among the leading laggards
on the Dow industrials, down 4% and 3.8% respectively.
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.
Fed expectations: The market-implied probability of more rate
hikes in 2016 continued to tumble on Thursday.
The December Fed-funds futures contract has fully taken out the
odds of a rate increase 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.
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 plunged Thursday 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, but later recovered somewhat as rumors circulated that
the Bank of Japan may have intervened to weaken its currency.
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. Exxon Mobil
Corp. (XOM) fell 1.6%, Transocean Ltd. (RIG) lost 3.6%, and
ConocoPhillips (COP) shaved off 2%.
The Velocity Shares 3X Long Crude ETN (UWTI) sank 6.1%.
Other movers: Shares of Twitter Inc. (TWTR) lost 2.9% 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% 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 fell to 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 12:45 ET (17:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
JP Morgan Chase (NYSE:JPM)
Historical Stock Chart
From Mar 2024 to Apr 2024
JP Morgan Chase (NYSE:JPM)
Historical Stock Chart
From Apr 2023 to Apr 2024