US stocks slumped on Thursday on growing fears the euro zone's efforts to tackle its sovereign debt crisis will fall short, jeopardizing the global economic recovery and disappointing US economic data with the Dow barely clinging to the 10,000 level. Commodities plunged and Treasuries soared.
The DJIA fell 376 points or 3.6% to 10,068, its 3rd straight day of losses and biggest percentage fall since March 5 last year. The tech-rich Nasdaq Composite fell 94 points or 4.1% to 2,204 while the broad-market S&P 500 shed 43 points or 3.9% to 1,072, down 12% from its Apr high, signaling a correction and marking the worst day since late Apr 09. The index also ended below the key 200-day moving average support.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of nearly 19 to 1 while on the Nasdaq, more than 11 stocks fell for every one that rose. The CBOE Volatility or VIX Index jumped 30% to 45.79, its highest level since Mar 09.
All 30 of the Dow's blue-chip components closed lower. Industrial and commodity-related stock tumbled more than 4.4% each to lead declines in all 10 of the S&P 500’s main industry groups. BoA, Alcoa and GE dropped more than 5.7%. Dell prvided little comfort after the bell when it reported stronger-than-expected profit but warned of volatile global currencies and components shortages. Its stock fell 3.1% in extended trade.
Tonight’s expiration of US stock options and progress on a financial-reform bill may have added to volatility after US jobless claims unexpectedly increased to 471,000 last week and the Conference Board’s index of leading economic indicators posted a surprise drop of 0.1%. The slide came a day before the German parliament votes on the country’s contribution to US$1 trillion EU/IMF rescue fund. Looking ahead to today, investors will have their eyes on the German IFO and the European mfg PMIs.
Pls note the German lower house of parliament is due to announce their plans on how much to contribute to the EU/IMF rescue fund either tonight or weekend.
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