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.
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Why You Might Want to Cancel That Restaurant Reservation
The cost of dining out rose 3 percent in May year-over-year, while the amount paid to eat at home inched up just 0.6 percent. The growing disparity in prices could prompt consumers to abandon restaurants for home-cooked meals, according to a report today by Bloomberg.
“Eating in hasn’t been this attractive compared to dining out since 2010,” Bloomberg reports. That’s good news for consumers worried about their budgets, but could be a problem for restaurants’ bottom lines.
So far, consumers aren’t making the shift. This spring, spending at restaurants and bars totaled more than sales at grocery stores for the first time.
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Part of the reason consumers are sticking with restaurants could be that wages are starting to slowly increase, so consumers have a little more money to spend on meals.
They may also be dining out because it’s often an easier option. Shopping and preparing meals takes time – time that people simply don’t have these days. A quarter of employees say that they are working after the standard work day has ended, and about 40 percent work at least one weekend a month, according to Staples Advantage. That leaves little time for food prep.
Supermarkets have responded to the time-pressed consumer by increasingly offering prepared meals that require little more than reheating at home. The prices for such meals tend to be higher than the cost of their ingredients but less than the price of eating out or ordering in.
Here’s What Consumers Were and Weren’t Buying in June
Retail sales were disappointingly soft in June, continuing a zig-zag pattern of strength and weakness this year. Sales fell 0.3 percent, falling shy of economists’ expectations for a 0.3 percent gain after a 1 percent jump in May. The only spending categories to post decent gains were electronics and appliance stores sales, gas station sales and discount stores.
“In May, retail gains signaled that consumers may have started using their so-called pump price dividend toward purchases of discretionary items,” Chris G. Christopher, Jr., the director of consumer economics at IHS Global Insight, wrote in an email to clients. Now, he added, the retail data “are pointing to a consumer that spends their paycheck in fits and starts.”
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Those fits and starts averaged out to a fairly healthy 2.6 percent annualized increase over April, May and June. “The glass half-full take on consumers is that 2.6 percent is still somewhat better than the 2.3 percent consumption growth we've averaged since the beginning of the current expansion,” J.P. Morgan economist Michael Feroli said in a research note. “The glass half-empty view is that there is now even less evidence of a sharp snapback in spending after an unambiguously disappointing Q1.”
Here’s a breakdown from the Bespoke Investment Group of how different retail categories fared:
7 Personal Details You Should Never Divulge Online
What do the following have in common?
- The name of your favorite movie
- Concert tickets or sporting event passes with a barcode
- Your high school
- Your mother’s maiden name
- The name of your best friend in high school
- Your full birthdate, including the year
- The street address of your childhood home
Basically, any of the answers above can be used to answer common security questions that would allow cyber thieves to gain access to an online banking or credit card account. They can be used to reset your password. That’s why you should never post these details publicly on a social media account. Even the name of a beloved pet or school mascot can be fair game.
Related: Think You’ve Been Hacked? 10 Tips to Protect Yourself Now
We already know not to post our vacation plans, where we are meeting friends for drinks or dinner, or where our children go to school. But we should be aware that information we post on our social media accounts can be used by others to profile and target us.
This is especially important when you consider that Facebook users admit that as much as 7 percent of their Friend lists, which can easily number 200 or more, are people they’ve never met in person. If you share your address and phone number on Facebook with Friends only, make sure all of your contacts are people you know; otherwise cut them from your list or relegate them to Acquaintance status.
Even if you don’t have a profile on Facebook, chances are your spouse, co-worker, or teenager does. According to the Pew Research Center, half of Internet users who do not use Facebook themselves live with someone who does. Make sure they’re not giving out your personal information too.
Shopping Showdown: Walmart Takes On Amazon’s ‘Prime Day’
In case it wasn’t already perfectly obvious that Walmart is gunning for Amazon, the Bentonville, Ark. giant just kicked up its e-tailing competition.
Walmart announced today that it will also offer thousands of discounts for online purchases on July 15, the same day Amazon plans on hosting its Prime Day shopping extravaganza. And in its blog post announcing the sales, Walmart took a clear swipe at Amazon’s push to have shoppers subscribe to its $99 a year Prime service.
“We’ve heard some retailers are charging $100 to get access to a sale,” the Walmart blog says. “But the idea of asking customers to pay extra in order to save money just doesn’t add up for us. We’re standing up for our customers and everyone else who sees no rhyme or reason for paying a premium to save.”
Related: Amazon’s Prime Concern—A New Online Blitz by Walmart
Walmart, the world’s largest retailer, is also offering another limited-time deal to boost e-commerce sales. Starting today, customers will receive free standard shipping with online purchases that cost a minimum of $35, instead of the usual $50. The change will be effective for at least 30 days.
In February, Walmart CEO Doug McMillon told analysts on an earnings conference call that the company would invest between $1.2 billion and $1.5 billion in e-commerce throughout the year.
Neither Walmart nor Amazon has released information about specific sale offers yet, so the early hype might prove unwarranted, but the battle is clearly on and now the claws are out.
Update: Amazon responded to Walmart’s gibe with its own accusation. “We’ve heard some retailers are charging higher prices for items in their physical stores than they do for the same items online,” Greg Greeley, vice president of Amazon Prime, wrote in an email to Bloomberg. “The idea of charging your in-store customers more than your online customers doesn’t add up for us.”
We’re All Becoming Distracted Victims of Smartphones
Your phone buzzes at work. You promised yourself you wouldn’t check your phone until you turn in your half-finished assignment that’s due in an hour, so you don’t. But you start to wonder — who is texting you? What does the text say? Your mind wanders.
A new study has found that even when we try to disregard a notification, just being aware of a new message distracts us enough to impair our concentration and hurt our performance. These distractions are equal to actively opening the notification on your mobile device.
A Gallup poll reveals that 81 percent of smartphone users keep their phone in close proximity “almost all the time during waking hours.” Depending on the volume of notifications users receive, keeping a phone so close could lead to a noticeably negative impact on work performance.
Related: The New Workplace Trend — Smartphone Mini-Vacations
The study adds to the growing list of negative affects smartphones can have on users. Other effects include impaired sleep, increased pressure to communicate with friends and family, and the inability to detach from work.
Smartphones are only going to affect more and more individuals. The number of people who own a smartphone has increased from 35 percent in 2011 to 64 percent in April of this year. Among millennials, 84 percent report owning a smartphone.
As millennials begin to enter the workforce and the number of apps available for download increases, the potential for distraction only grows larger.