Dow Suffers Worst Drop of 2013, Shedding 354 Points

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"There wasn't much to be happy about today," sighed Schaeffer's Senior Equity Analyst Joe Bell, CMT. "All major sectors across the board finished deep in negative territory, and we finished near the lows of the day. Furthermore," he continued, "the round-number 1,600 mark on the S&P 500 Index (SPX) was broken, and right now selling pressure is dominating." The Dow Jones Industrial Average (DJI) faced its worst day of 2013, losing nearly 350 points, or more than 2%, and settling far below the psychologically significant 15,000 level.

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

plus...
    The Dow hits a new milestone for 2013, Facebook ( FB ) gets fancy, and Apple ( AAPL ) bulls stay optimistic.

The Dow Jones Industrial Average (DJI) posted its worst loss of 2013, and its steepest percentage decline since Nov. 7, 2012 (when it plunged 2.4%). In terms of points, today was the largest sell-off since Nov. 9, 2011 (a drop of 389). By the closing bell, the blue-chip index had shed 354 points, or 2.3%, to settle at 14,758.32. On the charts, the Dow violated its 80-day moving average on a closing basis for the first time this year. Not surprisingly, all 30 components were awash in red. At the back of the pack was Walt Disney ( DIS ), down 3.7% following a downgrade ; Cisco Systems ( CSCO ) lost 1%, making it the top performing blue-chip.

The S&P 500 Index (SPX) breached its 80-day trendline and the 1,600 level to close at its lowest point since late April. All told, the index surrendered 40.7 points, or 2.5%, to close at 1,588.19. The Nasdaq Composite (COMP) tumbled as well, dropping 78.6 points, or 2.3%, to end the session at 3,364.63. The tech-rich index did not, however, breach its 80-day moving average.

The CBOE Market Volatility Index (VIX) spiked to a year-to-date high, gaining 23.1%, or 3.9 points, to settle at 20.49. It was the first close above 20 for the index since Dec. 28.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"The stock market continued its downward momentum today, as several sectors gapped significantly lower," noted Bell. "We have seen a lot of volatility of late, as investors struggle to come to terms with just when the Federal Reserve will begin to ease up on its stimulus package. With rates jumping and stocks plummeting, investors are starting to brace themselves for this tapering, and many are fleeing to the sidelines."

3 Things to Know About Today's Market :

  • The main culprit for today's market sell-off was still yesterday's news . Investors sprinted for the exits on fears that the central bank may soon become less accommodative as economic factors improve. The selling was not limited to U.S. stocks -- currencies, commodities, bonds, and international equities also tumbled. (ABC News)
  • Existing home sales rose by 4.2% in May, hitting their highest level since November 2009 and showing a nearly 13% improvement from 2012. Elsewhere, the Labor Department noted that initial jobless claims rose by 18,000 last week, which was more than economists were expecting. (USA Today, Los Angeles Times)
  • Facebook Inc ( FB ) announced a new offering within its social-media empire: short videos. Build into Instagram, the feature allows users to record up to 15 seconds of streaming content, make aesthetic enhancements, and immediately post to the masses. (The New York Times)

5 Stocks We Were Watching Today :

  1. A hefty amount of long-term, out-of-the-money calls was purchased by Advanced Micro Devices ( AMD ) bulls.
  2. Eleventh-hour call buyers wagered on a short-term pop higher in Apple Inc. ( AAPL ) shares.
  3. Green Mountain Coffee Roasters (GMCR) bears scooped up long puts, continuing a trend among the options crowd.
  4. Micron Technology (MU) secured a price-target hike this morning, following yesterday evening's earnings release.
  5. Put buyers targeted AT&T Inc. (T) for short-term downside.

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 futures succumbed to today's selling pressure, as concerns about an end to the Fed's bond-buying efforts joined forces with worries over China's economic prospects. July-dated crude settled off $2.84, or 2.9%, to close at $95.40 per barrel.

It was a far worse day for gold, which dropped to its lowest point since September 2010 as the U.S. dollar zoomed higher. August-dated gold surrendered $87.80, or 6.4%, to settle at $1,286.20 per ounce.

SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: AAPL , AMD , CSCO , DIS , FB

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