Dow Sheds Nearly 600 Points, S&P 500 in Correction in a Wild Day on Wall Street
U.S. stocks plunged more than 3.5 percent on Monday, closing off session lows in high volume trade as fears of slowing growth in China pressured global markets.
S&P 500 ended nearly 80 points lower, off session lows of about 104 points lower but still in correction territory after the tech sector failed intraday attempts to post gains. Cumulative trade volume was 13.94 billion shares, the highest volume day since Aug. 10, 2011.
The major averages had a volatile day of trade, plunging sharply in the open and more than halving losses to trade less than 1 percent lower on the day, before closing down more than 3.5 percent.
"I think we probably rallied too fast. A lot of people that covered their shorts got their shorts covered," said Peter Coleman, head trader at Convergex. He noted the Dow was still trading several hundred points off session lows and that a close better than 500 points lower would be a good sign.
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"The market's going to be focused on China tonight to see if they come on tonight with something that would be considered a viable (way) to stimulate growth in that economy," said Quincy Krosby, market strategist at Prudential Financial.
The Dow Jones industrial average ended nearly 600 points lower after trading in wide range of between roughly 300 to 700 points lower in the minutes leading up to the close.
In the open, the index fell as much as 1,089 points, making Monday's move its biggest intraday swing in history. In midday trade, the index pared losses to trade about 110 points lower.
The blue-chip index posted its biggest 3-day point loss in history of 1,477.45 points.
During the first 90 minutes of trade, the index traveled more than 3,000 points in down and up moves.
"I'm hoping for some stability here but I think markets remain very, very vulnerable to bad news (out of) emerging markets," said Dan Veru, chief investment officer at Palisade Capital Management.
He attributed some of the sharp opening losses to exchange-traded funds. "It's so easy to move a bajillion dollars in a nanosecond."
Trading in stocks and exchange-traded funds was paused more than 1,200 times on Monday, Dow Jones said, citing exchanges. Such pauses total single digits on a normal day, the report said. An increase or decline of five percent or more triggers a five-minute pause in trading, Dow Jones said.
The major averages came sharply off lows in midday trade, with the Nasdaq off as low as less than half a percent after earlier falling 8.8 percent. Apple traded more than 1.5 percent lower after reversing losses to briefly jump more than 2 percent.
"There was sort of a lack of follow-through after the morning's crazy action in the overall market," said Robert Pavlik, chief market strategist at Boston Private Wealth. "The selling really dissipated once we got to around 10 o'clock."
He attributed some of the late morning gains to a short squeeze and bargain hunting.
Art Hogan, chief market strategist at Wunderlich Securities, noted that the sharp opening losses were due to great uncertainty among traders and the implementation of a rare market rule.
The New York Stock Exchange invoked Rule 48 for the Monday stock market open, Dow Jones reported.
The rule allows NYSE to open stocks without indications. "It was set up for situations like this," Hogan said. The rule was last used in the financial crisis.
Stock index futures for several major indices fell several percentage points before the open to hit limit down levels.
Circuit breakers for the S&P 500 will halt trade when the index decreases from its previous close by the following three levels: 7 percent, 13 percent, and 20 percent.
"Fear has taken over. The market topped out last week," said Adam Sarhan, CEO of Sarhan Capital. "We saw important technical levels break last week. Huge shift in investor psychology."
"The market is not falling on actual facets of a sub-prime situation. It's falling on fear of the unload of China. That's really behind this move," said Peter Cardillo, chief market economist at Rockwell Global Capital.
The CBOE Volatility Index (VIX), considered the best gauge of fear in the market, traded near 40. Earlier in the session the index leaped above 50 for the first time since February 2009.
"When the VIX is this high it means there's some panic out there," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
However, he said with stocks more than halving losses he "wouldn't be surprised if we closed positive." "If you could move it that far you could move it another 350 points" on the Dow," he said.
Overseas, European stocks plunged, with the STOXX Europe 600 down more than 5 percent, while the Shanghai Composite dropped 8.5 percent, its greatest one-day drop since 2007.
Treasury yields came off session lows, with the U.S. 10-year yield at 2.01 percent and the 2-year yield at 0.58 percent.
The U.S. dollar fell more than 1.5 percent against major world currencies, with the euro near $1.16 and the yen stronger at 119 yen versus the greenback.
A U.S. Treasury Department spokesperson said in a statement that "We do not comment on day-to-day market developments. As always, the Treasury Department is monitoring ongoing market developments and is in regular communication with its regulatory partners and market participants."
The Dow transports ended more than 3.5 percent lower to approach bear market territory.
About 10 stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 901 million and a composite volume of 4 billion as of 2:05 p.m.
Crude oil futures settled down $2.21, or 5.46 percent, at $38.24 a barrel, the lowest since February 2009. In intraday trade, crude oil futures for October delivery fell as much as $2.70 to $37.75 a barrel, a six-and-a-half-year low.
Gold futures settled down $6.10 at $1,153.60 an ounce.
This post originally appeared on CNBC. Read More at CNBC:
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Increasing Number of Americans Delay Medical Care Due to Cost: Gallup
From Gallup: “A record 25% of Americans say they or a family member put off treatment for a serious medical condition in the past year because of the cost, up from 19% a year ago and the highest in Gallup's trend. Another 8% said they or a family member put off treatment for a less serious condition, bringing the total percentage of households delaying care due to costs to 33%, tying the high from 2014.”
Number of the Day: $213 Million
That’s how much the private debt collection program at the IRS collected in the 2019 fiscal year. In the black for the second year in a row, the program cleared nearly $148 million after commissions and administrative costs.
The controversial program, which empowers private firms to go after delinquent taxpayers, began in 2004 and ran for five years before the IRS ended it following a review. It was restarted in 2015 and ran at a loss for the next two years.
Senate Finance Chairman Chuck Grassley (R-IA), who played a central role in establishing the program, said Monday that the net proceeds are currently being used to hire 200 special compliance personnel at the IRS.
US Deficit Up 12% to $342 Billion for First Two Months of Fiscal 2020: CBO
The federal budget deficit for October and November was $342 billion, up $36 billion or 12% from the same period last year, the Congressional Budget Office estimated on Monday. Revenues were up 3% while outlays rose by 6%, CBO said.
Hospitals Sue to Protect Secret Prices
As expected, groups representing hospitals sued the Trump administration Wednesday to stop a new regulation would require them to make public the prices for services they negotiate with insurers. Claiming the rule “is unlawful, several times over,” the industry groups, which include the American Hospital Association, say the rule violates their First Amendment rights, among other issues.
"The burden of compliance with the rule is enormous, and way out of line with any projected benefits associated with the rule," the suit says. In response, a spokesperson for the Department of Health and Human Services said that hospitals “should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it.”
See the lawsuit here, or read more at The New York Times.
A Decline in Medicaid and CHIP Enrollment
Between December 2017 and July 2019, enrollment in Medicaid and the Children's Health Insurance Program (CHIP) fell by 1.9 million, or 2.6%. The Kaiser Family Foundation provided an analysis of that drop Monday, saying that while some of it was likely caused by enrollees finding jobs that offer private insurance, a significant portion is related to enrollees losing health insurance of any kind. “Experiences in some states suggest that some eligible people may be losing coverage due to barriers maintaining coverage associated with renewal processes and periodic eligibility checks,” Kaiser said.
