By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
Dow tumbles 160 points; haven assets like gold and the yen
surge
U.S. stocks extended their losses Thursday, as tumbling oil
prices and a steep drop in the dollar against the yen spurred
investors to shun assets perceived as risky.
The S&P 500 shed 18 points, or 0.9%, to 2,049, weighed by a
1.6% drop in telecom stocks but boosted by a 0.4% rise in utilities
shares.
The Dow Jones Industrial Average dropped 160 points, or 0.9%, to
17,555, led by a 2.4% drop in shares of Verizon Communications
Inc.(VZ). Meanwhile, the Nasdaq Composite declined 48 points, or
1%, to 4,873.
A healthy report on weekly U.S. jobless claims
(http://www.marketwatch.com/story/us-jobless-claims-fall-9000-to-26700-2016-04-07)
failed to calm the jitters in the market. Investors are still
assessing the minutes of the Federal Open Market Committee's March
meeting
(http://www.marketwatch.com/story/sentiment-on-fed-running-against-april-rate-hike-minutes-show-2016-04-06),
released Wednesday, which dampened the prospects for an April
interest rate hike.
Overall, persistent worries about a global economic slowdown
were continuing to rattle markets on Thursday, after Wednesday's
strong late-afternoon rally
(http://www.marketwatch.com/story/us-stock-futures-edge-higher-as-oil-jumps-2016-04-06),
said Quincy Krosby, market strategist at Prudential Financial.
The market is coming to terms with the realization that "central
banks' tools are losing their potency, and that is underpinning
existing concerns over global growth," Krosby said.
Fear-driven trade: The prospect of a dovish Federal Reserve,
added to the belief the Bank of Japan will not intervene to support
its currency, sent the dollar
(http://www.marketwatch.com/story/dollar-slides-to-fresh-18-month-low-vs-yen-as-market-bets-on-no-boj-intervention-2016-04-07)
to its lowest level against the yen in nearly 18 months.
Since the beginning of the year, the dollar has shed more than
10% of its value against the Japanese currency. Concerns about
global economic growth have ratcheted up demand for haven assets
such as the yen and gold. At the same time, expectations of a
slowdown in U.S. interest-rate hikes have sapped demand for the
buck.
The soaring yen on Thursday was "a head-scratcher for equity
investors," as it indicated that global investors are hedging
against risk, said Kim Forrest, senior portfolio manager at Fort
Pitt Capital.
This gives out "a perception of fear in the market," which in
turn sparked selling in the stock market, Forrest added.
Gold prices surged 1.6%, to $1,243 an ounce.
Oil direction: A fresh drop in oil prices also dented the
appetite for risky assets, as investors weighed a fall in crude
inventories
(http://www.marketwatch.com/story/oil-prices-surge-on-fresh-hopes-for-a-production-freeze-2016-04-06)
against fading hopes that a meeting of oil producers will lead to a
curb on output.
"We remain at the mercy of the oil market, and decisions on
freezing or cutting [oil production] on April 17 in Doha will
likely set the tone for equity markets too," said Brenda Kelly,
head analyst at London Capital Group, in emailed comments.
Bumpy path: Some analysts noted a spike in stock-market
volatility in the last few sessions, after an unusually long period
of calm. The S&P was down nearly 1% on Thursday, after rallying
more than 1% on Wednesday, following a 1% loss on Tuesday.
"This sounds pretty innocuous in and of itself. And while it
ultimately may be a blip on the index's still upward-sloping trend,
it's something that hasn't occurred since Feb. 12," said Frank
Cappelleri, technical analyst at Instinet, in emailed comments.
Data docket: The level of jobless claims
(http://www.marketwatch.com/story/us-jobless-claims-fall-9000-to-26700-2016-04-07)
last week was "very benign, but may be bottoming out after quite a
multiyear fall from the peak in March 2009," said Peter Boockvar,
chief market analyst at The Lindsey Group, in emailed comments
after the report's release.
A reading on consumer credit for February is due at 3 p.m.
Eastern.
Federal Reserve Chairwoman Janet Yellen will hold conversations
with her predecessors Ben Bernanke and Alan Greenspan in New York
City at 5:30 p.m. Eastern. Kansas City Fed President Esther George
will speak on the economy in York, Nebraska at 8:15 p.m.
Eastern.
Stocks to watch: Valeant Pharmaceuticals International Inc.
(VRX.T) surged 7.7% after it secured a commitment from loan
holders, which will buy the drugmaker time
(http://www.marketwatch.com/story/valeant-convinces-loan-holders-to-loosen-financial-terms-2016-04-07)
as it attempts to resuscitate its business.
Bed Bath & Beyond (BBBY) shares were up 5.5% after the
retailer released quarterly earnings and announced its first
quarterly dividend
(http://www.marketwatch.com/story/bed-bath-beyond-surges-on-earnings-first-ever-quarterly-dividend-2016-04-06).
ConAgra Foods Inc. (CAG) gained 1.5% after the food maker's
quarterly results beat profit and sales expectations
(http://www.marketwatch.com/story/conagra-beats-profit-and-sales-expectations-2016-04-07).
Rite Aid (RAD) fell 0.5% as the retailer topped the Street's
view on profit but missed on sales
(http://www.marketwatch.com/story/rite-aid-beats-profit-expectations-but-misses-on-sales-2016-04-07).
L Brands Inc.'s (LB) Victoria's Secret announced layoffs as part
of a restructuring that will also cut some of its merchandise
categories. L Brands shares were down 1%.
Sprint Corp. (S) tumbled 2% after the company said late
Wednesday it reached a deal
(http://www.marketwatch.com/story/sprint-reaches-deal-to-sell-and-lease-back-assets-to-raise-22-billion-2016-04-06)
with several bankrupt entities to sell and then lease back network
assets which will then be used as collateral to raise $2.2
billion.
With earnings season coming up, many investors are waiting on
the sidelines in hope of a sign that demand is picking up and
top-line revenue is growing, Prudential's Krosby said.
Other markets: The Stoxx Europe 600 turned lower, after minutes
from the European Central Bank's last meeting showed policy makers
didn't rule out further rate cuts
(http://www.marketwatch.com/story/ecb-minutes-show-more-rate-cuts-possible-2016-04-07).
In Asia, the Nikkei 225 index closed slightly highe
(http://www.marketwatch.com/story/china-stocks-fall-as-3-month-ban-on-selling-stocks-set-to-expire-2016-04-07)r,
while the Shanghai Composite Index slid 1.38%.
(END) Dow Jones Newswires
April 07, 2016 11:42 ET (15:42 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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