S&P, Dow down over 10% for the year as Wall Street sinks

NEW YORK: Investors dumped US stocks across the board on Thursday, pushing the S&P 500 and the Dow Jones industrial average down more than 10% for the year, on fears over the health of the global economy.

At its lowest on Thursday, the Nasdaq was 19.34% lower than its peak closing high on July 20, and about 35 points shy of being confirmed in bear territory.

The S&P financial sector, already the worst performer among the 10 major sectors on the index, led the rout with a 3.23% decline, its steepest drop since Sept 1.

The rout in financial stocks is being led by banks as investors fear that the negative interest rates employed by a growing band of central banks to spur economic growth is now part of the problem rather than the solution.

US Federal Reserve Chair Janet Yellen said on Thursday that the central bank was looking at negative interest rates after saying the weakened global economy and steep slide in US equity markets was tightening financial conditions faster than the Fed wanted.

“It’s a very difficult market right now. Clearly, anything perceived as a risk asset is being sold down,” said Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.

“The bigger issue ... what, in my mind, is driving all this selloff is that markets are losing confidence in central banks’ ability to act as an effective referee,” he said.

Globally, stocks fell sharply. The dollar hit a 16-month low against the yen and investors bought gold and top-rated bonds.

US Treasury security yields plunged to levels not seen since 2012 in some cases.

At 12:48pm ET (1748 GMT), the Dow Jones industrial average was down 345.37 points, or 2.17%, at 15,569.37.

The S&P 500 was down 32.8 points, or 1.77%, at 1,819.06 and the Nasdaq Composite index was down 46.91 points, or 1.1%, at 4,236.69.

US bank stocks, like their European peers, took a severe beating. The S&P 500 bank index was down 4.54%, led by Bank of America’s 7% fall.

Boeing tumbled 11% to US$103.78, hit by a report that regulators are probing the planemaker’s accounting. The stock was the biggest drag on the Dow, responsible for more than a fourth of the index’s decline.

At the other end of the Dow was Cisco, up 9.1% at US$24.55 after reporting a bigger-than-expected profit.

The stock was one of only two gainers on the Dow and gave the biggest boost to the S&P 500 and the Nasdaq.

Declining issues outnumbered advancing ones on the NYSE by 2,664 to 409. On the Nasdaq, 2,040 issues fell and 674 advanced. - Reuters