Benchmarks ended in the red zone yesterday, once again dragged
down by declines in momentum and bio-tech stocks. The bearish
mood weighed on Nasdaq the most as it suffered the largest
decline in two and half years. Separately, discouraging Chinese
trade data unnerved investors. The day's positive economic data
on unemployment benefits failed to restrict the day's loss.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) dropped 1.6% to close
Thursday's trading session at 16,170.22. The Standard & Poor
(S&P 500) declined 2.1% to finish at 1,833.08. The tech-laden
Nasdaq Composite Index plunged 3.1% to 4,054.11. The fear-gauge
CBOE Volatility Index (VIX) surged almost 15% to settle at 15.89.
Total volume for the day was roughly 7.5 billion shares, higher
than this month's average of 6.8 billion. Advancing stocks were
outnumbered by declining stocks on the NYSE. For 22% stocks that
advanced, 75% declined.
The day's intense selling pressure in momentum and bio-tech
stocks dragged the tech-heavy Nasdaq down. The index suffered its
steepest one-day percentage decline since November 2011. The
S&P also fell below its 50-day moving average and only about
2% members of the S&P 500 ended in the green. The index
posted its biggest decline since February 3 this year. The Dow
too posted its worst one-day percentage drop in more than two
Declines in momentum stocks had a negative impact on the
benchmarks. Shares of momentum stocks such as Boston Scientific
), Red Hat, Inc. (NYSE:
), Tesla Motors, Inc. (NASDAQ:
), Pandora Media, Inc. (NYSE:
Financial Corporation (NASDAQ:
) plunged 4.5%, 3.9%, 5.9%, 10.5% and 4.3%, respectively.
High-growth stocks from the Consumer Discretionary sector such as
online retailer Amazon.com Inc. (NASDAQ:
), online movie rental company Netflix, Inc. (NASDAQ:
), online travel company TripAdvisor Inc. (NASDAQ:
) and The Priceline Group Inc. (NASDAQ:
) fell 4.4%, 5.2%, 7.1% and 4.6%, respectively. Overall, the
Consumer Discret Select Sector SPDR (XLY) decreased 2.5%.
Bargain-hunting investors sold bio-tech stocks. Shares of
bio-tech companies such as Biogen Idec Inc. (NASDAQ:
), Gilead Sciences Inc. (NASDAQ:
), Vertex Pharmaceuticals Incorporated (NASDAQ:
), Amgen Inc. (NASDAQ:
) and Celgene Corporation (NASDAQ:
) soared 4.4%, 7.3%, 6.1%, 4.9% and 4.9%, respectively. The
Health Care Select Sector SPDR (XLV) led the decline among the
S&P 500 sectors. The sector dropped 3.3%. All the 10 sectors
of the S&P 500 ended in the red.
Investors also sold technology stocks. Internet and related
stocks such as Facebook, Inc. (NASDAQ:
), LinkedIn Corporation (NYSE:
), Yahoo! Inc. (NASDAQ:
) and Google Inc. (NASDAQ:
) plummeted 5.2%, 3.5%, 4.2% and 4.1%, respectively. Overall, the
Technology Select Sector SPDR (XLK) fell 2.3%.
Benchmarks traded in the negative zone right from the beginning
of the session owing to disappointing Chinese trade data.
Concerns over the strength of the Chinese economy rose after the
Chinese government reported that March exports fell 6.6% from a
year earlier and imports plunged 11.3% in the same period.
However, in March there was a trade surplus of $7.71 billion in
contrast to a deficit of $23 billion in February.
Shares of retailer Bed Bath & Beyond Inc. (NASDAQ:
) plunged 6.2% after a survey by FactSet showed that the
companies first quarter earnings forecast of 92 cents to 96 cents
per share fell short of analysts' estimate of $1.02 per share.
The first quarter earnings forecast also fell short of Zacks
Consensus Estimate of $1.60 per share.
On the economic front, the U.S Department of Labor reported that
seasonally adjusted initial claims decreased 32,000 to 300,000 in
the week ending April 5. This fall in application for
unemployment benefits reached the lowest level since May 12,
2007. The fall was more than the consensus expectations of
initial claims decreasing to 318,000.
Meanwhile, according to the Department of the Treasury, in March
total budget receipts aggregated $216.0 billion, a deficit of $37
billion. The deficit of $37 billion was less than the consensus
estimate of a deficit of $67.6 billion.