THE Dow and the S&P 500 extended losses to a fourth day yesterday, as investors took their cues from last week’s disappointing jobs report, which raised fresh concerns about the US economy’s recovery.
Despite yesterday’s declines, the Dow industrials and the S&P 500 ended above their session lows. But trading has been choppy in recent weeks, with a series of gains interrupted by a few days of losses.
Banks and industrials led the S&P 500’s slide, with the S&P financial sector index and the S&P industrial sector index each down 1.6 per cent. The two sectors are closely tied to the prospects for economic growth.
The latest jobs figures added to a series of weaker-than-expected indicators, which have taken the edge off a strong multi-month rally.
The CBOE Volatility Index or VIX jumped 12.63 per cent yesterday to end at 18.81. The VIX is up about 21.4 per cent so far in April.
“We’re coming off a period of very high optimism, which is often problematic even when the fundamental news isn’t disappointing,” said Bruce McCain, chief investment strategist of Key Private Bank in Cleveland, Ohio.
“The jobs report is a cautionary note that we haven’t seen the last of disappointing news, suggesting there is probably a good stiff correction in our future, one tougher than an average correction.”
Stocks have rallied sharply in recent months, with the S&P 500 climbing nearly 30 per cent from its early October closing low to end at nearly a four-year high a week ago.
Volume was extremely light, with about 5.52bn shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, well below last year’s daily average of 7.84bn. The S&P 500 slid yesterday to a session low at 1,378.24, its lowest point in more than three weeks. But the benchmark index recovered some of that lost ground in afternoon trading and held well above its 50-day moving average near 1,371. The Dow Jones industrial average fell 130.55 points, or one per cent, to end at 12,929.59. The Standard & Poor’s 500 Index slid 15.88 points, or 1.14 per cent, to 1,382.20. The Nasdaq Composite Index dropped 33.42 points, or 1.08 per cent, to 3,047.08.