US stocks end sharply lower; first monthly drop since August
By: Kate Gibson | Markets Writer
U.S. stocks closed steeply under water on
Friday, with Wall Street recording its first monthly loss since August,
as investors compiled a list of worries that now include emerging
markets.
Given the market's slide, investors are starting to realize there is "selective value out there," Jim Russell, senior equity strategist for U.S. Bank Wealth Management. "I still think the emerging market currency influence and volatility that goes into that probably plays out into the next couple of trading days," he said of the declines seen in the currencies of countries including Taiwan, Russia and Turkey that have come with signs China's economy is slowing.
Dependence on China as an export market and the tendency for the U.S. dollar to rise as the Federal Reserve tapers its asset purchases are both negative for emerging markets, while "the U.S. looks that much more stable and fundamentally superior to other global economies," said Russell.
"We do think the decline in the U.S. markets will be confined. We don't sense a wipe-out or dramatic decline is at hand here. Investors perhaps have gotten spoiled into thinking the market only goes in one direction," Russell added.
"When we haven't had any significant corrections, it doesn't take much," Randy Frederick, managing director of active trading and derivatives at Charles Schwab, said of the market's early dive. "If you look at years when January closes down, the odds of an up year are only 46 percent, based on patterns going back to 1951. That's basically a coin flip," said Frederick.
After a 231-point decline, the Dow Jones Industrial Average dropped 1 percent, with Chevron leading blue-chip declines after reporting earnings that disappointed investors.
Given the market's slide, investors are starting to realize there is "selective value out there," Jim Russell, senior equity strategist for U.S. Bank Wealth Management. "I still think the emerging market currency influence and volatility that goes into that probably plays out into the next couple of trading days," he said of the declines seen in the currencies of countries including Taiwan, Russia and Turkey that have come with signs China's economy is slowing.
Dependence on China as an export market and the tendency for the U.S. dollar to rise as the Federal Reserve tapers its asset purchases are both negative for emerging markets, while "the U.S. looks that much more stable and fundamentally superior to other global economies," said Russell.
"We do think the decline in the U.S. markets will be confined. We don't sense a wipe-out or dramatic decline is at hand here. Investors perhaps have gotten spoiled into thinking the market only goes in one direction," Russell added.
"When we haven't had any significant corrections, it doesn't take much," Randy Frederick, managing director of active trading and derivatives at Charles Schwab, said of the market's early dive. "If you look at years when January closes down, the odds of an up year are only 46 percent, based on patterns going back to 1951. That's basically a coin flip," said Frederick.
After a 231-point decline, the Dow Jones Industrial Average dropped 1 percent, with Chevron leading blue-chip declines after reporting earnings that disappointed investors.
| Name | Price | Change | %Change | ||
|---|---|---|---|---|---|
| DJIA | Dow Jones Industrial Average | 15698.85 | -149.76 | -0.94% | |
| S&P 500 | S&P 500 Index | 1782.59 | -11.60 | -0.65% | |
| NASDAQ | Nasdaq Composite Index | 4103.88 | -19.25 | -0.47% |
Energy
and consumer discretionary led declines and telecommunications and
utilities were the worst performers among the 10 major industry groups
on the S&P 500, which fell 0.7 percent.
Wal-Mart Stores wavered after the discount retailer sliced fourth-quarter guidance and blamed factors including the federal government's cut in food stamps and the cold weather. Chipotle Mexican Grill rallied after the fast-growing burrito chain reported larger-than-expected growth in quarterly sales at established restaurants.
Amazon.com declined after the online retailer reported profit and sales beneath estimates. Mattel dropped after a decline in Barbie sales dented its results.
After a brief bout in positive turf, the Nasdaq fell 0.5 percent.
Wal-Mart Stores wavered after the discount retailer sliced fourth-quarter guidance and blamed factors including the federal government's cut in food stamps and the cold weather. Chipotle Mexican Grill rallied after the fast-growing burrito chain reported larger-than-expected growth in quarterly sales at established restaurants.
Amazon.com declined after the online retailer reported profit and sales beneath estimates. Mattel dropped after a decline in Barbie sales dented its results.
After a brief bout in positive turf, the Nasdaq fell 0.5 percent.
Positive market developments getting washed out: Pro
Discussing the impact of the taper on the U.S. and emerging markets, with Michael Ryan of UBS, and CNBC's Jim Cramer.
Stocks
remained under water through a series of economic data on Friday, with
Thomson Reuters/University of Michigan's final read on consumer
sentiment showing a decline in January from the previous month, while
the Chicago Purchasing Manager's Index for January fell 1.2 to 59.6,
down for a third month in a row. Data also had personal income up 0.1 percent in December, matching estimates, and spending rising 0.4 percent versus a 0.5 percent estimate.
As the dollar climbed against the currencies of major U.S. trading partners; the yield on the 10-year Treasury note fell 4 basis points to 2.657 percent.
Gold futures for April delivery fell $2.60 to $1,239.80 an ounce, down 1.9 percent on the week after five weeks of gains. Crude-oil futures for March delivery fell 74 cents, or 0.8 percent, to $97.49 a barrel, up 0.9 percent for the week and down about 0.9 percent in January.
U.S. stocks jumped on Thursday, with the S&P 500 on track for weekly gains, as companies including Facebook reported better-than-expected quarterly results and data had the economy expanding in the fourth quarter as consumer spending gained traction.
As the dollar climbed against the currencies of major U.S. trading partners; the yield on the 10-year Treasury note fell 4 basis points to 2.657 percent.
Gold futures for April delivery fell $2.60 to $1,239.80 an ounce, down 1.9 percent on the week after five weeks of gains. Crude-oil futures for March delivery fell 74 cents, or 0.8 percent, to $97.49 a barrel, up 0.9 percent for the week and down about 0.9 percent in January.
U.S. stocks jumped on Thursday, with the S&P 500 on track for weekly gains, as companies including Facebook reported better-than-expected quarterly results and data had the economy expanding in the fourth quarter as consumer spending gained traction.
—By CNBC's Kate Gibson
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