Wall Street suffered another ugly day of losses on Friday but the selloff failed to live up to the hype provided by scary overnight plunges in the global and futures markets.
Today's Market
The Dow Jones Industrial Average dove 312.30 points, or 3.59%, to 8378.95, the broader S&P 500 lost 31.34 points, or 3.45%, to 876.77 and the Nasdaq Composite tumbled 51.88 points, or 3.23%, to 1552.03. The consumer-friendly FOX 50 slid 23.00 points, or 3.32%, to 669.69.
While the selling at the open was ugly, it wasn't quite as severe as some had predicted. The markets closed well off session lows but still solidly red.
By the time the dust settled, the major markets ended another turbulent five days of trading with a weekly loss and yet more uncertainty. The Dow lost nearly 500 points while the Nasdaq plunged 9% this week. The benchmark U.S. index is now off by 23% this month.
“We’ve got a global market meltdown going on right now and it's indiscriminate of geography and sector," said Art Hogan, chief market strategist at Jefferies & Co.
There were few places to take cover from the selling onslaught as the equities tumbled further, oil prices ended at 17-month lows and global currencies weakened significantly. Market participants fled to ultra-safe Treasuries.
Market sentiment deteriorated significantly overnight, sending the pre-market futures to such extreme losses that trading had to be halted at 5 a.m. EDT.
“Fear is ruling this market, clearly," said Ryan Detrick, equities analyst at Schaeffer's Investment Research. "People just want their money back. They want out of this market.”
All 30 stocks on the Dow ended the day in the red. The percentage losers were led by General Motors (GM) and Bank of America (BAC). Citigroup (C) and DuPont (DD) also saw steep declines.
The Nasdaq Composite didn't fall as far as the broader market but still lost about 3%. Big-name tech stocks like Dell (DELL), Yahoo!(YHOO) and eBay (EBAY) fell sharply.
In a piece of ominous trivia, Friday's trading session marked the 79th anniversary of the 1929 stock market crash.
Global Markets Plummet
The wave of selling began in Asia, where Tokyo's Nikkei plummeted nearly 10% to its lowest level since 2003 and Hong Kong's Hang Seng plunged 8.3% to four-year lows. Developing nations weren't spared as India's market dove 11% -- its second-largest fall ever, ending at the lowest level since late 2005.
Europe's stock markets recovered from earlier plunges with London's FTSE 100 and Germany's DAXIndex closing about 5% lower each.
What Capitulation?
While some may cheer the fact Wall Street didn't follow plummeting global markets, many traders were disappointed Friday didn't mark a moment of capitulation.
“I would have liked to have... gotten it over with. It’s very different this time around. It’s a slow bleed," said Frank Davis, director of sales and trading at LEKSecurities. Traders have said for weeks they were looking for a massive capitulation selloff before they would be assured the worst is over.
Others say the lack of a major meltdown on Friday provides evidence the markets have already reached a bottom.
“These people that don’t think we’ve seen blood in the streets, I don’t know what they are looking at,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald, citing steep selloffs earlier this month. “I think we’ve seen the bottom… Valuations have already discounted a major recession globally.”
Markets Slammed by Forced Liquidations
Market participants blamed some of the losses on forced selling by mutual funds and hedge funds whose customers have demanded their money back.
“A lot of babies are intentionally being thrown out with the bath water,” Steve Wood, senior portfolio strategist at Russell Investments, told FOX Business. “You can still sell something and get money for it… The stock market is like this huge ATM for a lot of levered investors.”
The selling on Wall Street came despite a lack of major negative developments in the U.S.
Still, late Thursday tech bellwether Microsoft issued a bearish earnings outlook, which followed a string of gloomy guidance given by major companies this week.
Also, the U.K. government said the nation's GDP tumbled by a worse-than-expected 0.5% in the third quarter, its worst performance since 1990.
Currency, Energy Markets Selloff
Currency markets continued to play a role on the stock markets as the BritishPound plummeted as much as 6% -- a dramatic move for a major currency -- to touch $1.5264. The euro plunged to a two-year low against the dollar, falling as low as $1.2494.
Global recession fears and forced liquidation were most evident perhaps in crude oil prices, which plummeted to their lowest level since May 2007 despite an emergency measure by OPEC to slash production by 1.5 million barrels a day.
The OPCE announcement did nothing to stop the losses as crude settled $3.69 lower at $64.15 a barrel.Crude lost more than 11% of its value this week, outpacing the losses in the equities markets. Crude is now off by 40% over the past four weeks alone.
Corporate Movers
PNC Financial (PNC) acquired struggling National City (NCC) for $5.58 billion in a deal that will make PNC the nation’s fifth largest U.S. bank. PNC also announced plans to issue $7.7 billion of preferred stock and related warrants to the U.S. Treasury under the government’s new rescue program.
Chrysler LLC announced plans to slash 25% of its salaried workforce starting next month. General Motors (GM) has intensified talks to buy Chrysler even as Chrysler’s parent Cerberus Capital Management shops the auto maker to Nissan and other companies, Reuters reported.
Data Dump
The National Association of Realtors reported a 5.5% jump in existing home sales in September to an annual rate of 5.18 million -- the highest level in 13 months. Economists had expected a more modest increase of 0.2% to 4.92 million units. Sales rose by 1.4% from a year ago, the first year-over-year rise in three years.
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