Stocks Plummet on Earnings News, Tapering Fears

By
A A A

"The big news started last night, when Cisco Systems ( CSCO ) issued cautious guidance, and announced it would be cutting 5% of its workforce," said Schaeffer's Senior Equity Analyst Joe Bell, CMT. "Combine that with Wal-Mart's ( WMT ) sluggish view on consumer spending, and many market participants were quick to sell anything and everything in their portfolio. All major sectors finished deep in the red, as investors looked to unload many of their positions after the past few weeks of sideways price action came to an end." Against this grim backdrop, the Dow Jones Industrial Average (DJI) closed at its lowest level since July 3.

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

plus...
    Weekly jobless claims fell to a multi-year low, Wal-Mart's ( WMT ) quarterly revenue results disappointed Wall Street, and investor news triggered a price-target hike for Apple (AAPL).

The Dow Jones Industrial Average (DJI - 15,112.19) tumbled right out of the gate and remained deep in the red for the rest of the session. By the close, the index lost 225.5 points, or 1.5% -- finishing just slightly north of its intraday low of 15,094.03 and below its 80-day moving average for the first time since late June. Caterpillar (CAT) was the sole advancing blue-chip with its gain of 0.1%, while Cisco Systems ( CSCO ) paced the 28 decliners with an earnings-induced loss of 7.2%. Alcoa (AA) remained unchanged.

The S&P 500 Index (SPX - 1,661.32) didn't fare much better, and shed 24.1 points, or 1.4% -- its lowest daily close since July 10. Meanwhile, the Nasdaq Composite (COMP - 3,606.12) lopped off 63.2 points, or 1.7%.


The CBOE Market Volatility Index (VIX - 14.73) experienced some see-saw movement today, but finished the session 1.7 points, or nearly 13%, higher -- its first daily close above 14 since mid-July. The "fear barometer" is now on pace to end the week atop its 20-week moving average for the first time in more than a month.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"There was quite a bit of economic data out today, and it wasn't all bad," Bell went on. "Initial jobless claims were actually better-than-expected, and came in at their lowest level since October 2007. Treasury yields once again jumped to new highs, with some believing this improvement could bring tapering sooner rather than later."

3 Things to Know About Today's Market :

  • First-time jobless claims fell by a larger-than-anticipated 15,000 last week to 320,000, according to the Labor Department, marking the reading's lowest level since the fall of 2007. Meanwhile, the four-week moving average for initial unemployment filings dropped by 4,000 to 332,000, also notching a multi-year low. (MarketWatch)
  • The Labor Department also noted that its consumer price index (CPI) climbed by 0.2% in July, falling in line with the consensus view. On a year-over-year basis, the CPI gained 2%, its biggest increase since February. Excluding food and energy costs, prices still advanced by 0.2%. (CNBC)
  • Wal-Mart ( WMT ) reported an adjusted fiscal second-quarter profit of $4.07 billion, or $1.25 per share, on revenue of $116.2 billion. While the former matched bottom-line estimates, the latter fell short of analysts' projections for $118.47 billion in sales. The retailer is now forecasting a 2-3% increase in full-year revenue, compared to its earlier expectations for a rise of 5-6%. (Reuters)

5 Stocks We Were Watching Today :

  1. Analysts at RBC upped their price target for Apple (AAPL) following some investor-related news.
  2. Short- and longer-term bulls swarmed Zynga (ZNGA) on the heels of a management shake-up.
  3. Cisco Systems ( CSCO ) was hit with a trio of price-target cuts after announcing plans to reduce its workforce.
  4. Call volume ran unusually high on Applied Materials (AMAT) ahead of tonight's quarterly earnings report.
  5. Bearish speculators wagered on extended losses for downtrending Alcoa (AA) by October expiration.

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 :

Crude oil futures advanced for a fifth consecutive session, as unrest in Egypt sparked supply concerns. By day's end, September-dated oil added 48 cents, or 0.5%, to finish at $107.33 per barrel -- the contract's highest close in two weeks.

Meanwhile, gold futures surged today, as investors sought comfort in the safe-haven metal amid the sharp broad-market drop. The December-dated contract gained $27.50, or 2%, to end at $1,360.90 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.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.



This article appears in: Investing , Options

Referenced Stocks: CSCO , FB , INTC , TSLA , WMT

Schaeffer's Investment Research

Schaeffer's Investment Research
  • See all for Schaeffer's Investment Research
  • View Print Version

More from Schaeffer's Investment Research:

Related Videos

Stocks

Referenced

Most Active by Volume

59,607,987
  • $15.39 ▼ 0.84%
40,004,679
  • $124.43 ▼ 1.54%
33,587,205
  • $24.81 ▼ 1.23%
33,157,780
  • $40.655 ▼ 0.74%
30,784,865
  • $31.27 ▼ 0.60%
30,425,288
  • $8.41 ▲ 7.41%
29,886,161
  • $8.69 ▼ 0.80%
28,599,438
  • $6.01 ▲ 1.35%
As of 3/31/2015, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com