In a repeat of a now-familiar pattern, traders capitalized on headlines emerging late in the trading day, this time to push the market lower. With long-term investors largely on the sideline due to Europe’s uncertainty, the market remains susceptible to swift swings.
“The market has become overly sensitive to chatters and rumors out of Europe and to the headline news. This is exactly what happened yesterday and that just shows how unstable this market is,” said Eric Marshall, director of research at Hodges Capital Management in Dallas.
France’s President Nicholas Sarkozy said yesterday that talks to tackle the Eurozone crisis were stuck as they struggled to increase the bailout fund’s firepower, while a Wall Street Journal report said Europe’s bailout fund could be used to provide collateral to back up bond issues by troubled countries.
On Tuesday, stocks rallied on late news suggesting Eurozone leaders had a big package in place for rescuing indebted nations.
A weak economic outlook from the US Federal Reserve was responsible for the initial move lower yesterday afternoon.
Technology stocks were the biggest losers after a rare earnings miss from tech heavyweight Apple.
Apple shares fell below $400 after the company's revenue and profits came in below estimates for the first time in years on Tuesday as it sold far fewer iPhones than expected.
The CBOE Volatility Index VIX, Wall Street's so-called fear gauge, jumped 10.1 per cent to 34.76, reflecting market jitters ahead of a summit of European Union leaders on Sunday. Investors hope the meeting will produce a concrete plan to handle the region’s debt crisis.
The Dow Jones industrial average was down 75.49 points, or 0.65 per cent, at 11,501.56. The Standard & Poor’s 500 Index was down 15.63 points, or 1.28 per cent, at 1,209.75. The Nasdaq Composite Index was down 54.41 points, or 2.05 per cent, at 2,603.02.
On the upside, Intel Corp hit a new 52-week high of $24.50 earlier after the chipmaker forecast quarterly revenue above expectations.
The stock closed up 3.6 per cent at $24.24.