S&P posts biggest drop since Nov., 2011
NEW YORK — Stocks fell more than 2 percent on Thursday, extending the previous day’s sharp decline as investors fretted over the Federal Reserve’s plan to begin reducing its stimulus later this year if the economy strengthens.
The S&P 500 recorded its biggest daily decline since November 11, 2011, on the year’s heaviest day of trading. All 10 S&P sectors were sharply lower, with 94 percent of stocks traded on the New York Stock Exchange down for the day and more than four-fifths of Nasdaq-listed shares ending lower.
The Dow Jones industrial average dived 353.87 points, or 2.34 percent, at 14,758.32. The Standard & Poor’s 500 Index was down 40.74 points, or 2.50 percent, at 1,588.19. The Nasdaq Composite Index dropped 78.57 points, or 2.28 percent, at 3,364.64.
The Fed’s program of bond-buying has fueled stock market gains this year, sending indexes to a series of all-time highs. A trend emerged of investors buying on market dips and limiting stocks’ decline.
David Joy, chief market strategist at Ameriprise Financial in Boston, said it wasn’t clear that pattern would continue.
“There’s money leaving the market from people who were convinced that the rally has been mostly attributable to the Fed, and the rise on the 10-year yield is a concern since it happened so quickly,” he said. “It’s too early to say whether this represents a buying opportunity or if the weakness will continue.”
The S&P 500 index closed below its 50-day moving average for only its second time this year. An extended break below that level, a key technical measure of the recent trend in stocks, could add to selling pressure. It also closed under 1,600 for the first time since May 2.
About 9.29 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, above the daily average so far this year of about 6.36 billion shares.
Bernanke on Wednesday said the central bank’s policy of buying $85 billion in bonds per month could start to wind down this year if the economy is strong enough and could finish in mid-2014.