Stock Market News for August 01, 2014 – August 1, 2014 – Zacks.com
Benchmarks suffered their biggest losses in months on Thursday, following a default by Argentina, and a spike in US labor costs. Concerns about the European economy and Russia-Ukraine crisis also dragged the S&P 500 below a key technical level and the Dow dropped more than 300 points. Both these indices snapped their five-month streak of gains, while Nasdaq ended in negative territory for the month.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) dropped 1.9%, or 317 points, to close Thursday’s trading session at 16,563.30. The Standard & Poor 500 (S&P 500) declined 2.0% to finish at 1,930.67. The tech-laden Nasdaq Composite Index closed at 4,369.77; declining 2.1%. The fear-gauge CBOE Volatility Index (VIX) surged 27.2% to settle at 16.95. This was the VIX’s highest daily close since mid-April. Total volume on the New York Stock Exchange (NYSE) was about 4.2 billion. Decliners outpaced advancing stocks on the NYSE. For 89% stocks that declined, 9% advanced.
The blue-chip index tumbled 317 points, its biggest one-day drop since Feb 3.The S&P 500 also registered its steepest one-day percentage drop since Apr 10. The S&P 500 closed below its 50-day moving average, since Apr 15. Selling accelerated once the key technical level was breached. Currently, the S&P 500 is about 2.4% below its all-time closing high of 1,987.98.
Standard & Poor’s downgraded Argentina’s credit rating to “selective default” after the government failed to pay interest on $13 billion of restructured bonds within the deadline. This was the second time Argentina defaulted in 12 years. The South American country failed to pay its debt of $539 million to bondholders after a U.S judge ruled that the country can’t make debt payments until and unless hedge funds led by Elliot Management Corp. get their money.
Earlier, Argentina had failed to make debt payments to the hedge funds. The group of hedge funds had sued Argentina for $1.5 billion. Talks between the group of hedge funds and the government collapsed late Wednesday.
Meanwhile in Portugal, shares of Banco Espirito Santo SA plunged almost 40% after its plans to raise capital without government aid was dented after incurring huge losses.
Ongoing geopolitical tension also kept investors jittery on Thursday. Russia banned import of soy from Ukraine. Russia is contemplating possible restriction on importing Greek fruits and U.S. poultry. On Tuesday, the U.S. and the European Union had expanded economic sanctions against Russia.
Meanwhile, investors were concerned about a possible rise in wage inflation, on the backdrop of a strong rebound in second-quarter GDP. However, the Federal Open Market Committee (FOMC) in its two-day policy meeting allayed fears of a possible hike in interest rates. The FOMC trimmed the bond buyback plan but gave no hints about the timing of an increase in the federal funds rate.
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Stock Market News for August 01, 2014 – August 1, 2014 – Zacks.com
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