Wall Street Sees Another Broad Stock Sell-Off
Wall Street’s sell-off Monday was nearly as broad as Friday’s, though trading volume fell short of the record set Friday on the New York Stock Exchange.
Meanwhile, as money continued to flee stocks, some investors piled into Treasury securities, even as yields fell to near their lows reached last fall.
In commodities trading, oil tumbled on a report that Nigeria might withdraw from OPEC. The cartel denied the report.
On Wall Street, the Dow industrials sank 234.68 points, or 2.9%, to 7,784.58, a smaller loss than Friday’s 390-point, 4.6% dive.
But losers topped winners by 26 to 8 on the NYSE and by 25 to 11 on Nasdaq, about the same as on Friday.
The Standard & Poor’s 500 index slid 27.91 points, or 3.3%, to a new five-year low of 819.85, and the Nasdaq composite dropped 36.50 points, or 2.8%, to 1,282.65, also a five-year low.
Within the S&P; 500, 11 stock industry groups rose in the session, led by personal products makers, including Gillette (up $1.23 to $29) and Avon Products (up $1.21 to $44.93).
But 92 industry groups declined in the session. The biggest loser: diversified utility companies, led by Williams, which plunged $3.15 to $2.01 after warning of a big loss and cutting its dividend.
Analysts said the breadth of the decline provided little hope that a turnaround was imminent.
“Emotions are running high right now, and a quick move to the downside can easily be replaced by a move to the upside and vice versa,” said Charles G. Crane, strategist for Victory SBSF Capital Management. “People are shooting first and asking questions later.”
As stocks fell again, Treasury bonds gained: The yield on the 10-year T-note sank to 4.45% from 4.52% Friday and is nearing the low of 4.18% set in November.
The two-year T-note fell to 2.34% from 2.41% Friday. The low was 2.30% in November.
“A 4.5% yield on the 10-year Treasury is a heck of a lot better than minus 20% to 30% for stocks,” said Steven Bohlin, who helps manage $1.8 billion at Thornburg Investment Management in Santa Fe, N.M.
Investors have been adding money to bond mutual funds at the fastest pace since 1986. They added a record $18 billion to bond funds in June, with most of the money going into government and investment-grade funds, said Lipper Inc., a New York fund tracking firm.
Some experts said bond investors may be betting that the Federal Reserve will be forced to cut short-term interest rates again, even with rates already at 40-year lows.
“The bond market is starting to realize that the Fed may ease before they tighten,” said James Caron, a fixed-income strategist at Merrill Lynch & Co.
But those expectations aren’t helping corporate junk bonds, which continue to plunge in value with stocks.
In commodities trading, crude oil had its biggest decline in three months after the Independent, a newspaper in Britain, reported that Nigeria may leave the Organization of the Petroleum Exporting Countries and boost production.
The report, which cited unidentified people familiar with the cartel, was denied by OPEC’s official news agency.
“Talk about members leaving OPEC will make people nervous,” or optimistic that oil production will rise, said Chris Schachte, an energy trader at GSC Energy Corp.
Crude oil for August delivery fell $1.23, or 4.4%, to $26.60 a barrel in New York.
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Market Roundup, C9-10
