April 11, 2014
NEW YORK: US stocks sank on Thursday, with the S&P 500 turning negative for the year and the Nasdaq falling its most in a day since June 2012 as investors again sold high-flying names in the technology and biotech sectors and sought shelter in defensive names.
April 11, 2014
NEW YORK: US stocks sank on Thursday, with the S&P 500 turning negative for the year and the Nasdaq falling its most in a day since June 2012 as investors again sold high-flying names in the technology and biotech sectors and sought shelter in defensive names.
The day’s decline more than wiped out Wednesday’s advance as so-called “momentum” names suffered their worst day since a recent pullback in the names began in March.
Nasdaq's decline took it below its 14-day and 100-day moving average, a sign of weakening short-term momentum.
More than 80 per cent of Nasdaq-listed shares fell and the index's drop was more than twice the percentage decline in the blue-chip Dow index. About 69 per cent of stocks fell on the New York Stock Exchange.
The move was a sharp reversal from the previous day, when shares rallied after minutes from the latest Federal Reserve policymakers' meeting showed members were keener to keep rates low than earlier expected.
The day's decline more than wiped out Wednesday's advance as so-called "momentum" names suffered their worst day since a recent pullback in the names began in March. The CBOE volatility index, a measure of investor anxiety, spiked 12.3 per cent to 15.51, though it remains at historically low levels.
"The rotation is out of some of the higher-growth, higher-momentum areas of the market, and until we get earnings visibility, we could see protracted weakness," said Eric Teal, chief investment officer at First Citizens Bancshares Inc in Raleigh, North Carolina, which manages $3.5 billion.
The Nasdaq biotechnology index shed 5.7 per cent, its biggest one-day drop since August 2011. Alexion Pharma was the biggest decliner among S&P 500 components, off 8 per cent at $143.19, followed by Gilead Sciences, off 7.1 per cent at $65.63.
Internet-related tech shares which were among last year's biggest advancers, also dropped. Facebook Inc fell 5 per cent to $59.28 while Netflix Inc sank 4.3 per cent to $337.94. Google Inc was down 2.8 per cent at $548.62. The S&P technology sector shed 2 per cent as one of the worst-performing S&P sectors.
Losses were broad, with nine of the S&P 500's 10 primary sectors lower on the day.
The only group to rise was telecom, considered a defensive play, which inched up 0.3 per cent. AT&T Inc rose 1.1 per cent to $35.29.
The Dow Jones industrial average was down 196.51 points, or 1.20 per cent, at 16,240.67. The Standard & Poor's 500 Index was down 29.81 points, or 1.59 per cent, at 1,842.37. The Nasdaq Composite Index was down 112.95 points, or 2.70 per cent, at 4,070.95.
Bed, Bath & Beyond shares slumped 6.1 per cent to $63.78 after the home-goods retailer reported fourth-quarter sales that fell from a year ago and gave a first-quarter outlook that was below expectations.
The lacklustre earnings overshadowed optimistic data on the labour front. Initial jobless claims dropped sharply last week to the lowest in almost seven years, which suggests job growth may be picking up after a harsh winter.
Reception for three initial public offerings was negative.
Shares of bailed out auto-lender Ally Financial Inc fell in its market debut, the biggest US initial public offering so far this year. The stock lost 4 per cent to $23.99.
Two biotech companies — Cerulean Pharma Inc and Adamas Pharmaceuticals Inc — also declined in their trading debuts. Cerulean fell 3.1 per cent to $6.78 while Adamas lost 4.4 per cent to $15.30.
Imperva Inc plunged 41.9 per cent to $28.91 after the data centre security company reported preliminary fist-quarter results. Rival FireEye Inc lost 8.2 per cent to $51.76.
Courtesy: Reuters
