New York- The stock market on Thursday suffered its worse one-day drop since February, driven down by a confluence of worries, from weak company earnings to the looming end of stimulus from the Federal Reserve.
But it wasn’t just stocks that suffered; oil fell to its lowest level since March, gold dropped and even Treasury notes edged lower.
Stocks started the day lower after a dose of bad earnings news, and losses accelerated throughout the day. Whole Foods Market and Exxon Mobile were among companies that fell after reporting results forecasts that disappointed investors.
The stock market has been on a bull run for more than 5 years, with the most recent leg of that surge pushing the standard & Poor’s 500 index to an all-time high a week ago. Investors are now getting concerned that stocks may have climbed too far and reflect too much optimism on the outlook for growth.
“We’ve been on a strong run” said Jerry Braakman, chief of investment officer at First American Trust. “There’s just more concern that stock valuations are rich compared to historical norms.”
The S&P 500 dropped 39.40 points, or 2 percent, to 1,930.67, its biggest loss since April 10. The index suffered its first monthly loss since January.
The Dow Jones industrial average plunged 317.06 points, or 1.9 percent, to 16,563.30. The NASDAQ composite fell 93.13 points, or 2.1 percent, to 4,369.77. The Russell 2000, an index of small-company stocks, plunged 26.50 points, or 2.3 percent, to 1,120.7.
The main driver behind Thursday’s sell-off was reassessment of the outlook for interest rates in the U.S. said Paul Zemsky, chief investment officer of Multi-Asset Strategies and Solutions at Voya Investment Management.
“We’re closer to the first move higher in interest rates,” said Zemsky. “And there’s definitely a camp that believes that only reason that were at these levels is because the Fed has kept the rates at zero.”
Original Article By: Steve Rothwell- AP Business Writer