U.S. stocks fell the most since June as forecasts from Cisco (CSCO) Systems Inc. and Wal-Mart Stores Inc. disappointed while improving economic data pushed bond yields higher amid concern the Federal Reserve will reduce stimulus.
All 10 major industries in the S&P 500 retreated, with technology and consumer-discretionary shares dropping more than 1.8 percent. Cisco and Wal-Mart lost at least 2.9 percent after reporting earnings. Gannett Co. tumbled 4.8 percent after Warren Buffett's Berkshire Hathaway Inc. exited its stake in the newspaper publisher. Homebuilders rallied as confidence in the industry rose to the highest level since 2005 despite rising mortgage rates.
The Standard & Poor's 500 Index slipped 1.5 percent, the most since June 24, to 1,660.26 at 3:17 p.m. in New York. The Dow Jones Industrial Average dropped 231.26 points, or 1.5 percent, to 15,106.40, the lowest since July 5. Trading in S&P 500 stocks was 15 percent higher than the 30-day average at this time of day. Treasury yields rose to the highest levels in two years.
"With weaker earnings, higher interest rates and geopolitical concerns, risk assets like stocks don't do well in that type of environment," Jim Russell, the senior equity strategist for U.S. Bank Wealth Management, said in an interview from Cincinnati. His firm oversees $110 billion. "The jobless claims numbers were sufficiently strong that taper fears are probably front and center in terms of display today."
Reports today showed claims for jobless benefits unexpectedly dropped last week to the lowest level in almost six years, signaling the U.S. job market continues to mend. The cost of living rose in July for a third month, supporting the Federal Reserve's forecast that inflation will move closer to its target.
David Fuller's view High valuations, mixed earnings results relative to the 1st quarter, uncertainty over quantitative easing (QE), a somewhat overextended rally relative to the 200-day moving average and today's downward dynamic have combined to check Wall Street's advance (weekly & daily). Some additional mean reversion towards the MA appears likely.Back to top