Dow Loses 326 Points Amid Growing Economic Jitters

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"Many headlines might say that weak manufacturing data sparked today's sell-off, but in reality, the bears were in control in January, and continued to press things lower again," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. The Dow Jones Industrial Average (DJI) continued to widen its losses today, closing sharply lower and hitting its lowest point since mid-October. "The 1,775 level on the S&P 500 Index (SPX) had been viewed as support, but it's been broken in a big way. Don't be a hero here. Fear is ramping up, and this is a good sign. Still, all those levels of support that broke could now be resistance."

Continue reading for more on today's market, including :

  • Our CEO and founder Bernie Schaeffer shares one lesson all option traders can take away from recent activity in the CBOE Volatility Index (VIX) trading pits.
  • See how Ford Motor Company ( F ) bulls bet big -- and lost -- ahead of today's January sales report.
  • Earnings on Deck from Michael Kors Holdings Ltd ( KORS ), Myriad Genetics, Inc. ( MYGN ), and Boston Scientific Corporation ( BSX ): how the indicators line up ahead of tomorrow's earnings reports.
  • Plus ... manufacturing data shocks the Street, construction spending disappoints, and Facebook Inc ( FB ) call players stay active.
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The Dow Jones Industrial Average (DJI - 15,372.80) swallowed its seventh triple-digit decline of the year today, shedding 326.1 points, or 2.1%, to close at its lowest point since Oct. 17. Just one Dow component -- Pfizer Inc. (PFE) -- managed to gain ground, up 0.7%. Pacing the 29 losers was AT&T Inc. (T), which dropped 4.1%.

The S&P 500 Index (SPX - 1,741.89) endured a similar drubbing, off 40.7 points, or 2.3%. Meanwhile, the Nasdaq Composite (COMP - 3,996.96) shed 106.9 points, or 2.6%, to end south of the 4,000 level for the first time since Dec. 12.


The CBOE Volatility Index (VIX - 21.44) zoomed higher, adding 3 points, or 16.5%. It was the fear gauge's first close north of 20 since Oct. 8.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Emerging markets get lots of blame for the recent weakness, but we need to remember that Latin America has been in a bear market for three years now," Detrick noted. "So, are U.S. markets really down because of this now? I don't think so, but the action overseas is definitely creating some major volatility here. Elsewhere, Japan is officially in 'correction' mode, down 10% from its recent peak. This gets a lot of press, but the Japanese market has always been among the most volatile. Still, when one of the world's largest economies has a stock market that's correcting, it isn't going to help ongoing global jitters."

5 Items on Our Radar Today :

  1. An unexpected drop in manufacturing growth sparked economic concerns and had broadly negative repercussions on the market. The Institute for Supply Management said its national factory activity index slipped to 51.3 in January from a revised reading of 56.5 in December. The figure -- which was far south of economists' expectations -- suffered at the hands of new orders growth, which posted its worst monthly decline since December 1980. (Reuters via CNBC )
  2. Meanwhile, construction spending edged up 0.1% in December, propelled by strength in the private residential sector. The reading hit its highest level since early 2009, but still fell shy of estimates. (FOX Business)
  3. As Facebook Inc ( FB ) advanced to yet another new high, call buyers and sellers took action.
  4. Now down close to 7% so far this year, JPMorgan Chase & Co. (JPM) was hit with a price-target reduction before the open.
  5. Options speculators are placing bearish bets in anticipation of Aruba Networks, Inc.'s (ARUN) fiscal second-quarter earnings report later this month.

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Disappointing manufacturing data and continued emerging market concerns sent crude futures lower today. March-dated oil futures lost $1.06, or 1.1%, on the day, to rest at $96.43 per barrel.

By contrast, the same manufacturing report sparked a rush higher in gold, as traders sought the comfort of a "safe haven" investment. At the close, April-dated gold was up $20.10, or 1.6%, at $1,259.90 an ounce.

SCHAEFFER'S MARKET POSTURE



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: BSX , F , FB , KORS , MYGN

Schaeffer's Investment Research

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