Dow Falls 274 Points in Biggest Decline in Three Months
August 17 2017 - 5:00PM
Dow Jones News
By Michael Wursthorn and Justin Yang
The Dow Jones Industrial Average tumbled to its biggest decline
in three months Thursday, the latest pullback to disrupt a rally
that has sent U.S. stock indexes to several records this year.
Traders and money managers largely attributed the blue-chip
index's 274-point slide to a round of disappointing earnings from
companies ranging from big-box retailers to technology behemoths.
Thursday's declines eclipsed a selloff a week earlier, when shares
fell following a spate of weak corporate results and rising
tensions between the U.S. and North Korea.
Some investors said the moves were likely being amplified by
light stock-trading volumes over the summer, but they also
cautioned that there were signs of increasing unease in the market
after a period of calm had pushed measures of market volatility to
historic lows last month.
Stocks extended declines Thursday afternoon following a terror
attack in Barcelona that left at least 13 people dead and more than
50 others injured.
Earlier, U.S. government bond prices briefly surged as
unconfirmed rumors swirled that Gary Cohn, President Donald Trump's
National Economic Council director, was resigning in the wake of
the Mr. Trump's remarks about the protests in Charlottesville, Va.
The yield on the benchmark 10-year U.S. Treasury note settled at
2.197%, compared with 2.224% Wednesday. Bond yields fall as prices
rise.
Two White House aides told The Wall Street Journal that Mr. Cohn
hadn't resigned and wasn't planning to do so. Mr. Cohn is one of
the president's closest advisers and Mr. Trump has said he was
considering Mr. Cohn for the chairmanship of the Federal Reserve.
Investors and analysts said the response showed traders were
closely following events at the White House.
Mr. Trump disbanded two CEO councils Wednesday amid backlash
over his response to Charlottesville, adding to some investors'
doubts about how effective the administration will be in pushing
through policy changes. Investors' hopes for tax cuts and fiscal
stimulus had already dimmed, with Mr. Trump's agenda facing hurdles
in Congress.
All 30 companies in the Dow Jones Industrial Average fell
Thursday, along with all 11 major sectors of the S&P 500.
The Dow industrials declined 274 points, or 1.2%, to 21751 --
its biggest decline since May 17. The S&P 500 shed 1.5% and the
Nasdaq Composite fell 1.9%.
Wall Street's "fear gauge," the CBOE Volatility Index, jumped
more than 30%.
Retailer Wal-Mart Stores declined 1.6% after the company
reported lower profit on higher same-store sales.
Mark Stoeckle, chief executive and senior portfolio manager of
Adams Funds, said his firm owns shares of the retailer and believes
its sales growth amid the industry's broader struggles makes it
attractive.
The pullback "could be a good opportunity for people who don't
own Wal-Mart," said Mr. Stoeckle.
His firm also weighed adding to its Cisco Systems position in a
meeting Thursday morning, but executives felt it was competing
against companies that showed better growth, he said. "Doing OK in
an environment where you got too many opportunities isn't good
enough," Mr. Stoeckle added.
Shares of Cisco shed 4% after the company said revenue fell last
quarter. Victoria's Secret parent L Brands was one of the
worst-performing stocks in the S&P 500, falling 3.6% after the
company cut its forecast for the remainder of the year.
NetApp fell 6.7% after the company issued sales guidance that
fell on the low end of analyst projections, even though it beat
quarterly earnings expectations.
When shares fall after companies top projections, that could
suggest some pockets of the market have reached a peak, some
investors said.
"When good news isn't rewarded, that tends to give you pause,"
said Michael Scanlon, a portfolio manager at Manulife Asset
Management.
As U.S. stocks retreated, investments considered to be
relatively safe stores of value rose. Gold for August delivery
gained 0.7% to $1,286.40 an ounce.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
August 17, 2017 16:45 ET (20:45 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.