Stocks tumble. It’s their worst day in 3 months
U.S. stocks plunged Thursday as losses for Cisco Systems hurt technology companies while Wal-Mart declined after its latest quarterly report. Banks dropped as bond yields and interest rates sank for a second day.
It was the second-worst day for stocks this year, which has seen few large declines. Along with tech companies and retailers, transportation companies skidded, and all the industrial, financial and basic materials companies in the Standard & Poor’s 500 index fell. Those sectors tend to struggle when investors are concerned about economic growth, although there weren’t any specific signs of economic trouble Thursday.
The S&P 500 dropped 38.10 points, or 1.5%, to 2,430.01, its lowest close since July 11. The Dow Jones industrial average tumbled 274.14 points, or 1.2%, to 21,750.73. The Nasdaq composite sank 123.19 points, or 1.9%, to 6,221.91. The Russell 2000 index of smaller-company stocks dropped 24.59 points, or 1.8%, to 1,358.94.
High-dividend stocks such as utilities and real estate companies fared slightly better than the rest of the market, although they still finished lower. About 95% of the companies in the S&P 500 declined.
Bill Northey, chief investment officer at U.S. Bank Wealth Management, said that minutes released Wednesday from the Federal Reserve’s policy meeting last month marked “a little bit of a change in tone” and suggested that the central bank is becoming more cautious about raising interest rates.
That helped push down long-term interest rates in the bond market. Lower bond yields tend to hurt banks — because lower yields prevent banks from charging higher rates on loans — and benefit high-dividend stocks.
Investors were also assessing the state of President Trump’s business-friendly agenda as he continues to face criticism over his comments after the violence in Charlottesville, Va., over the weekend. After he was elected, investors hoped his proposals for tax cuts and infrastructure spending would boost corporate profits.
“Most of the agenda has been a little bit distracted by non-economic factors,” Northey said.
Investors also looked for safer investments after a deadly van attack in Barcelona that killed at least 12 people and injured 80.
Cisco Systems slid 4% to $31.04 after it said its sales would fall this quarter. It’s expecting a decline of 1% to 3% from the $12.4 billion in revenue it reported a year ago.
Data storage company NetApp dropped 6.7% to $39.56 after it offered a forecast for the current quarter that disappointed investors. Other tech firms fell too. Apple retreated 1.9% to $157.87. Software maker Adobe Systems declined 2.4% to $148.23. Chip maker Texas Instruments retreated 2.8% to $80.15.
Wal-Mart did better than analysts expected in the second quarter as shoppers spent more money on its website and more people went to its stores. But that wasn’t enough to sustain a recent rally in the company’s stock. Its shares fell 1.6% to $79.70.
L Brands, the parent of Victoria’s Secret, sank 3.6% to $37.55 after it cut its annual profit forecast because of weakening sales. The stock is down 43% this year as retailers slump overall and the company struggles after it decided to stop selling swimwear.
Amazon fell 1.8% to $960.57. Macy’s fell 2.6% to $19.62.
Despite some shaky reports Thursday, it’s been another strong quarter of corporate earnings. Per-share profits for S&P 500 companies have grown almost 11% in the second quarter from the same quarter last year. Energy companies’ profits have quadrupled because the price of oil has stabilized, and technology companies have posted big gains. Consumer-focused companies have made smaller gains.
Analysts, including Northey, mostly expect the stock market to keep rising as long as company profits keep growing.
The worst day for stocks this year was May 17. At that time, investors were concerned that Trump’s pro-business agenda might be affected by allegations that he asked the FBI to drop an investigation into former national security advisor Michael Flynn.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.19% from 2.23%. The yield on the two-year note fell to 1.29% from 1.33%.
Benchmark U.S. crude rose 31 cents to $47.09 a barrel in New York. Brent crude, used to price international oils, rose 76 cents, or 1.5%, to $51.03 a barrel in London.
Wholesale gasoline rose 2 cents to $1.59 a gallon. Heating oil rose 1 cent to $1.58 a gallon. Natural gas rose 4 cents to $2.93 per 1,000 cubic feet.
Gold rose $9.50 to $1,292.40 an ounce. Silver rose 11 cents to $17.05 an ounce. Copper fell 2 cents to $2.94 a pound.
The dollar fell to 109.67 yen from 110.16 yen. The euro fell to $1.1742 from $1.1769.
Germany’s DAX fell 0.5%. The CAC 40 of France and Britain’s FTSE 100 both shed 0.6%. The Japanese Nikkei 225 index edged down 0.1%, and Hong Kong’s Hang Seng fell 0.2%. In South Korea, the Kospi gained 0.6%.
UPDATES:
2:05 p.m.: This article was updated with closing prices, context and analyst comment.
7:35 a.m.: This article was updated with market prices and context.
This article was originally published at 6:55 a.m.
