By Ellie Ismailidou and Sara Sjolin, MarketWatch
Financials crumble; investors flock to gold, Treasurys
The Dow industrials and S&P 500 rang up their fifth losing
day in a row Thursday, falling amid a global rout led by tumbling
oil prices and losses in financial stocks.
The main indexes tried to stage a comeback in late-afternoon
trade, after the oil minister of the United Arab Emirates said the
Organization of the Petroleum Exporting Countries are "ready to
cooperate" on a production cut. But the remarks, reported by The
Wall Street Journal, weren't enough to sustain the rebound.
Remarks from Federal Reserve Chairwoman Janet Yellen during her
second day of testimony on Capitol Hill, meanwhile, didn't help
lift investor sentiment.
Also read:5 charts show the face of Thursday's panicky trading
(http://www.marketwatch.com/story/5-charts-show-the-face-of-thursdays-panicky-trading-2016-02-11)
The Dow Jones Industrial Average saw its losses cut in half at
one point but closed 255 points, or 1.2%, lower at 15,660, weighed
by a nearly 7% drop in Boeing Company (BA). The blue-chip gauge
broke below its closing low of Aug. 25, tumbling to its lowest
closing level since Feb. 6, 2014.
The S&P 500 ended the day down 23 points, or 1.2%, at 1,829,
its lowest close since April 11, 2014.
The index briefly fell below its Jan. 20 intraday low of
1,812.29, a significant support level, which has been described
(http://www.marketwatch.com/story/dow-futures-drop-200-points-setting-wall-street-up-for-an-ugly-start-2016-02-08)
as a "significant short-term technical formation" after which there
is "a downside pattern."
Meanwhile, the Nasdaq Composite closed 17 points, or 0.4%, lower
at 4,266, after briefly moving into positive territory.
Also read:Stock market live blog: Global equity rout
intensifies; yields plunge, yen soars
(http://blogs.marketwatch.com/thetell/2016/02/11/stock-market-live-blog-global-equity-rout-intensifies-yields-plunge-yen-soars/#wysiwygEditor)
A temporary lift from chatter about a coordinated effort to cut
oil production was quickly discounted by investors who had heard
similar reports before. "OPEC rumors have boosted the market before
but the long-term trend has been the opposite: supply is going up,"
said Mike Bailey, director of research at FBB Capital Partners.
The global stock rout started in Asia and Europe and deepened in
U.S. morning trade as Federal Reserve Chairwoman Janet Yellen
testified before the Senate Banking Committee
(http://blogs.marketwatch.com/capitolreport/2016/02/11/live-video-and-updates-of-janet-yellens-appearance-in-senate-committee/).
The Fed chief defended the central bank's December rate
increase, claiming it was designed to diminish accommodation "by a
modest amount", repeating many of her views expressed in her
testimony to the House Financial Services on Wednesday
(http://www.marketwatch.com/story/yellen-says-financial-conditions-less-supportive-to-growth-2016-02-10).
Strategists called Thursday's selloff a repeat of the same
risk-off theme fueled by fears of economic slowdown that has been
rattling global markets since the beginning of the year.
"It's a global cocktail that continues to be crafted on a daily
basis [including] worries about negative interest rates coupled
with pain in the banking sector and falling crude oil signaling
deflation," said Michael Antonelli, equity sales trader at R.W
Baird & Co.
As risk assets got slammed, demand for so-called haven assets
like gold and government bonds surged. The 10-year Treasury yield ,
the Treasury market's benchmark, closed at its lowest level in
almost three years
(http://www.marketwatch.com/story/treasury-yields-plunge-to-lowest-level-since-august-2012-2016-02-11)
(http://www.marketwatch.com/story/treasury-yields-plunge-to-lowest-level-since-august-2012-2016-02-11),
while gold , also considered a safe asset, soared to a one-year
high
(http://www.marketwatch.com/story/gold-jumps-to-1-year-high-as-global-market-rout-spurs-safe-haven-buying-2016-02-11).
Stephen Guilfoyle, managing director of NYSE floor operations at
Deep Value Execution Services, also cited the "outright depression
in manufacturing" along with an earnings recession and "crippled
European financials" amid the forces behind the selloff.
Financials weighed heaviest on the S&P 500, down 3%, as
ultralow interest rates and widening credit spreads have contribute
to worries about banks' balance sheets. The SPDR Financial Select
Sector exchange-traded fund (XLF) has tumbled more than 17% year to
date. Banking giants Goldman Sachs Group, Inc. (GS) and J.P. Morgan
Chase & Co. (JPM) were among the leading laggards on the Dow
industrials, both down over 4%.
Read:Bond market, Yellen face off on negative interest rates
(http://www.marketwatch.com/story/bond-market-yellen-face-off-on-negative-interest-rates-2016-02-10)
Fed expectations: The December Fed-funds futures contract has
fully taken out the odds of a rate increase by year-end and the
contract table all through 2016 is now beginning to price in a rate
cut, according to data from the Lindsey Group.
On the U.S. data docket, the number of people who applied for
unemployment benefits in early February fell to the lowest level
(http://www.marketwatch.com/story/low-jobless-claims-show-no-sign-of-rising-layoffs-2016-02-11)in
almost two months, a reassuring sign that few workers are losing
their jobs despite a slowdown in hiring.
Greenback falls: The dollar plunged Thursday to the lowest level
against the yen
(http://www.marketwatch.com/story/dollar-rebounds-vs-yen-on-rumors-of-boj-intervention-2016-02-11)
since 2014, but later recovered somewhat. Some investors speculated
that the Bank of Japan may have intervened to weaken its
currency.
Read:The one stock sector you need to fight the bear-market flu
(http://www.marketwatch.com/story/the-one-stock-sector-you-need-to-fight-the-spreading-bear-market-virus-2016-02-11)
Oil blues: Falling oil prices continued to weigh on global
equities. West Texas Intermediate crude oil slid below $27 a
barrel, settling at its lowest level in nearly 13 years
(http://www.marketwatch.com/story/crude-shrugs-off-supply-decline-pushes-below-27-a-barrel-2016-02-11)
(http://www.marketwatch.com/story/crude-shrugs-off-supply-decline-pushes-below-27-a-barrel-2016-02-11),
before paring losses in electronic trade.
The Velocity Shares 3X Long Crude ETN (UWTI) reversed heavy
losses to close up 1.5%.
Other movers: Shares of Boeing Co. (BA) plunged following a
Bloomberg report that the Securities and Exchange Commission had
launched an accounting probe
(http://www.marketwatch.com/story/boeings-stock-plunge-is-of-historic-proportions-2016-02-11).
Shares of Twitter Inc. (TWTR) lost 4.5% after the social-media
company late Wednesday reported flat user growth for the
fourth-quarter
(http://www.marketwatch.com/story/twitter-proves-wall-street-critics-were-right-2016-02-10).
On a more upbeat note, Cisco Systems Inc. (CSCO) jumped 9.6%
after its second-quarter earnings and revenue, released late
Wednesday, beat forecasts
(http://www.marketwatch.com/story/cisco-beats-estimates-and-raises-dividend-2016-02-10).
Tesla Motors Inc. (TSLA) gained 4.7% after the luxury electric
car maker said it could achieve a net profit
(http://www.marketwatch.com/story/tesla-reports-loss-but-says-profit-in-sight-2016-02-10)
in the final quarter of 2016.
PepsiCo Inc. (PEP) slipped 0.7% as the company issued a soft
outlook
(http://www.marketwatch.com/story/pepsico-profit-up-31-but-outlook-is-soft-2016-02-11).
Other markets: Hong Kong's Hang Seng Index returned to trading
after the Lunar New Year with a 3.9% tumble. That helped drive a
selloff at the open in Europe, where banks were hard hit. The Stoxx
Europe 600 index fell to its lowest close since October 2013
(http://www.marketwatch.com/story/european-stocks-knocked-to-lowest-since-2013-as-fear-selling-returns-2016-02-11).
(END) Dow Jones Newswires
February 11, 2016 16:48 ET (21:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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