Dow Plummets 266 Points, VIX Spikes 43% on Commodities Nosedive

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"There wasn't a whole lot to cheer about today," admitted Schaeffer's Senior Equity Analyst Joe Bell. "There was a combination of negative economic drivers, but China's worse-than-expected gross domestic product (GDP) number was most prominent. Gold and other commodities were hit the hardest, with the yellow metal registering one of its worst days in several years." The Dow Jones Industrial Average (DJI) added to its losses as the day dragged on, ending with a deficit of more than 260 points. Meanwhile, the CBOE Market Volatility Index (VIX) reacted to all the turmoil by shooting more than 43% higher.

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

  • Why Senior Trading Analyst Bryan Sapp expects "wild swings" throughout the markets -- and what traders can do about it.
  • As earnings near, speculators are taking an increasingly positive view of Bank of America ( BAC ).
  • Facebook Inc ( FB ) was targeted by short-term optimists, who expect to see moderate upside in the very near term.
plus...
  • The Dow suffers a stiff loss, Chinese economic growth falls short of estimates, and Netflix ( NFLX ) bulls stay active.

The Dow Jones Industrial Average quickly entered negative territory this morning and continued to lose ground throughout the session, violating its 10-day moving average along the way. By the time the closing bell mercifully sounded, the blue-chip index was a hair's breadth from its intraday nadir, down 266 points, or 1.8%, at 14,599.20. Losses were broad, as all 30 Dow components finished in the red. The "best" performing name was Wal-Mart Stores ( WMT ), down only 0.1%. Bringing up the rear was Caterpillar ( CAT ), down 3.3%.

The S&P 500 Index (SPX) also ended the session near its intraday low and south of its 10-day moving average. By the close, the SPX was off 36 points, or 2.3%, at 1,552.36. The Nasdaq Composite (COMP) was slightly worse for wear, down 78 points, or 2.4%, to close at 3,216.49.


The CBOE Market Volatility Index (VIX) spiked 5.2 points, or more than 43%, to settle at 17.27, its highest close since late February.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"In addition to the news out of China, housing data was also pretty bad," noted Bell. "As the market treaded water near its lows, news also surfaced of explosions at the Boston Marathon. In a day filled with bad news, this, of course, stands above the rest."

3 Things to Know About Today's Market :

  • Gold continued to move sharply lower , dropping south of the $1,400-an-ounce mark. The precious metal's two-day drop is the worst on record since 1980. (USA Today)
  • Contributing to gold's drubbing was economic news out of China, whose consumers are frequent buyers of the metal. The country's gross domestic product rose 7.7% in the first quarter, falling short of both the fourth-quarter growth rate and economists' expectations. (The Wall Street Journal)
  • For the third month running, sentiment among homebuilders declined . The National Association of Home Builders (NAHB)/Wells Fargo Housing Market index dropped to 42 in April from 44 last month, falling short of economists' consensus view. Readings north of 50 indicate that the majority of homebuilders see conditions as favorable; the last reading above this level was in April 2006. (Fox Business)

5 Stocks We Were Watching Today :

  1. With earnings due later this week, Microsoft (MSFT) has seen increased bearish betting .
  2. Google Inc (GOOG) was initiated with a "buy" rating and an ambitious price target of $950 this morning.
  3. Long-term, deep out-of-the-money puts were popular in Tesla Motors (TSLA), possibly as a protective-put strategy.
  4. Netflix, Inc. ( NFLX ) traders targeted short-term upside with out-of-the-money calls.
  5. In a relatively rare show of bearishness , Las Vegas Sands (LVS) speculators scooped up long puts.

EARNINGS

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

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Oil continued to retreat, dropping to its lowest point in 2013 after Chinese industrial production data fell short of expectations. May-dated crude dropped 2.8%, or $2.58, to end at $88.71 per barrel.

This move paled in comparison to gold, which posted its steepest one-day decline in more than 30 years. The June gold contract gave back $140.30, or 9.3%, to end the session at $1,361.10 an ounce. This was the lowest settlement price for a most-active contract since February 2011.

SCHAEFFER'S MARKET POSTURE

At the end of every market day, the staff at Schaeffer's Investment Research reviews the trading day in detail, covering major events and key market developments. Don't miss this critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.



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: BAC , CAT , FB , NFLX , WMT

Schaeffer's Investment Research

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