US STOCKS had the biggest one-day percentage drop since late June yesterday in higher-than-average trading volume after poor results and outlooks from Dow components Wal-Mart and Cisco.
Consumer and technology stocks were among the biggest decliners after Wal-Mart Stores’ shares fell on a surprise decline in quarterly same-store sales and Cisco Systems shares dropped one day after the network equipment maker announced it was cutting 4,000 jobs.
“Yes, we are down significantly but this is not a panic sell-off considering how much we have rallied so far this year,” said JJ Kinahan of TD Ameritrade. He added that although the CBOE Volatility Index , a gauge of investor anxiety, spiked for the day, the measure was still below 15.
Adding to the sell-off, data showed consumer prices rose broadly in July and new claims for jobless benefits last week fell near a six-year low, factors which could draw the Federal Reserve closer toward trimming its $85bn monthly stimulus.
The Dow Jones industrial average was down 225.47 points, or 1.47 per cent, at 15,112.19. The Standard & Poor’s 500 Index was down 24.07 points, or 1.43 per cent, at 1,661.32. The Nasdaq Composite Index was down 63.16 points, or 1.72 per cent, at 3,606.12.
The CBOE Volatility index VIX rose nearly 12 per cent to 14.55.
The S&P 500’s 1.4 per cent drop was the biggest since a 2.5 per cent fall on 20 June. So far this week, the index was down about 1.8 per cent.
Wal-Mart shares fell 2.6 per cent to $74.41 after the world’s largest retailer reported a surprise decline in same-store sales and missed revenue estimates for a fifth consecutive quarter. The company also lowered its revenue and profit forecasts for the year.