U.S. stocks were under heavy pressure during the regular trading session, closing with large losses that accelerated in the final half-hour amid a continuation of the recent volatile market moves. However, economic and earnings fundamentals seemingly remain solid, with Twitter rallying after its quarterly results and weekly jobless claims surprisingly dropping. Treasury yields were mixed, gold and the U.S. dollar were nearly unchanged and crude oil prices fell. Overseas, European equities fell with market skittishness exacerbated by the Bank of England’s interest rate warning.
The Dow Jones Industrial Average (DJIA) plummeted 1,033 points (4.1%) to 23,860, the S&P 500 Index tumbled 101 points (3.8%) to 2,581, and the NASDAQ Composite plunged 275 points (3.9%) to 6,777. In heavy volume, 1.2 billion shares were traded on the NYSE and 2.7 billion shares changed hands on the NASDAQ. WTI crude oil declined $0.64 to $61.15 per barrel and wholesale gasoline lost $0.02 to $1.75 per gallon. Elsewhere, the Bloomberg gold spot price slipped $0.67 to $1,317.72 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 90.31.
Weekly initial jobless claims dropped by 9,000 to 221,000, versus the Bloomberg expectation calling for a gain to 232,000, with the prior week’s figure being unrevised at 230,000. The four-week moving average fell by 10,000 to 224,500, while continuing claims dropped by 33,000 to 1,923,000, south of estimates of 1,940,000.
Treasuries were mixed, with the yield on the 2-year note losing 1 basis point to 2.13%, the yield on the 10-year note mostly unchanged at 2.83% and the 30-year bond rate increasing 1 basis point to 3.13%.
Treasury yields took a breather from a run to multi-year highs and the U.S. Dollar Index paused after a recent bounce the past few sessions off multi-year lows.
Schwab Center for Financial Research – Market Analysis Group
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