Stocks Hit By Late Selloff Amid Economic Fears
The stock market's losing streak continued Monday, with Wall Street suffering its worst day in two months in a selloff that had some worrying about a long summer for investors.
While banking and commodities led the charge lower, a general malaise among buyers sent stocks down for the fifth time in six trading days, the worst run in nearly a month.
Downbeat economic assessments set the tone for Wall Street, with the World Bank this morning saying global growth would be stifled, followed by an afternoon statement from the Mortgage Bankers Association that sharply cut this year's origination forecast.
The market ended the day with a sharp sell-off just before the closing bell.
The final round in the US Open golf tournament may have discouraged some activity in the market. Inclement weather over the weekend forced the final round to be played Monday, and volume on the New York Stock Exchange was a medicore 1.4 billion shares, a figure boosted by a flurry of last-minute selling.
The Dow industrials lost more than 200 points, while the bellwether Dow transport index fell 4.6 percent and the tech-heavy Nasdaq was off 3.3 percent. The S&P 500 ducked below the 900 level, where it had not closed since late May.
The Chicago Board Options Exchange's Volatility Index jumped past the key 30 level for the market's favorite fear gauge. A 30 for the VIX marks an expected period of high volatility on Wall Street.
Commodity stocks were lower at the open as were most financials and some of the tech leaders. Iron and steel stocks dropped 4 percent and aluminum company Alcoa led losers on the Dow industrials.
"Commodities are getting whacked, transports are getting destroyed," said Dave Rovelli, managing director of US equity trading for Canaccord Adams. "It's scary out there."
In earnings, drug store chain Walgreens said its profit dropped to 53 cents per share, slightly below Wall Street's expectations.
Shares of gun makers also fell after Barron's said a threat from the Obama administration to reinstitute weapons bans would hurt sales, which jumped after the election.
Smith & Wesson and Sturm Ruger both moved sharply lower.
Banks also fell, with Bank of America and JPMorgan Chase leading the sector to the negative side.
Energy stocks were lower as crude oil's price fell below $67 a barrel from a selloff in U.S. gasoline market as dealers bet there would be ample fuel supply in the country to meet demand from summer vacationers.
ExxonMobil dropped even as the company said it is nearing agreement with three major buyers on its liquefied natural gas project in Papua New Guinea.
On the plus side, Medarex shares soared on promising results for a prostate cancer drug.
Also, Verizon was one of the few Dow components to show gains as it, Motorola and T-Mobil USA prepare to launch a smartphone powered by Google.
Apple was trying to buck the trend lower after the company said it sold more than 1 million units of its newest iPhone, the 3GS, in the first three days of launch. But shares were still lower as investors remained skittish over the health of CEO Steve Jobs. CNBC confirmed Jobs had a liver transplant several months ago.
Boeing shares also were lower, falling as JPMorgan said a weak market for narrow-body aircraft would make the airliner prone to production cuts.
Market breadth was sharply negative, with losers beating gainers more than 6 to 1.