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- Jun 14, 2011
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U.S. stocks tumbled Friday to their biggest one-day loss in two weeks, extending a selloff fueled by worries about global growth.
The Federal Reserve's decision Thursday to keep short-term interest rates steady sparked the latest round of selling. For many investors, the Fed's reluctance to raise borrowing costs was a stark reminder of the U.S.'s potential vulnerability to slowing growth in China and other emerging markets.
"The market is trying to discover where it's going next, and we have two possible paths, either we're overwhelmed by the lack of growth and China slams into a hard landing, or China is not slowing as much as people thought," said Wayne Lin, portfolio manager at QS Investors, which oversees $21.6 billion. "What struck me about [the Fed's statement] was the reference to what was going on globally."
Fund managers and traders piled into bets that reflected the belief that interest rates will continue to remain low for a long time.
Banks and asset managers, which were poised to benefit from rising rates, sold off sharply, helping drag the Dow Jones Industrial Average down 290.16 points, or 1.7%, to 16384.58.
The S&P 500 declined 32.17 points, or 1.6%, to 1958.03, and the Nasdaq Composite Index fell 66.72, or 1.4%, to 4827.23.
Among the biggest decliners in the Dow industrials were Goldman Sachs Group and J.P. Morgan Chase, which fell 3% and 2.7%, respectively.
Also contributing to declines were shares of energy companies, which fell as economic-growth concerns triggered a drop in the price of oil. Earlier in the week, oil prices had rallied after an unexpectedly large drop in crude stockpiles. On Friday, crude-oil futures fell 4.7% to $44.68 a barrel, and energy companies in the S&P 500 led the index lower, falling 2.6%.
Higher-yielding stocks such as utilities, which struggled for much of the year as investors entered 2015 with the anticipation of a coming rate increase, ended down 0.6% on Friday. For the week, utilities stocks in the S&P 500 rose 2.5%, compared with the broader index's 0.2% loss. For the year, the sector is down 11%.
In the past month, wild swings have returned to the stock market, sparked by China's move to devalue its currency. The devaluation exacerbated concerns about growth in the world's second-largest economy and what it may mean for economies and markets around the globe.
More than 10.5 billion shares changed hands on Friday, the third-largest daily volume of the year. A host of options and futures contracts expired Friday, which can create a flurry of trading activity and can increase volatility.
Stocks Fall as Federal Reserve Decision Sparks Growth Concerns - WSJ
The Federal Reserve's decision Thursday to keep short-term interest rates steady sparked the latest round of selling. For many investors, the Fed's reluctance to raise borrowing costs was a stark reminder of the U.S.'s potential vulnerability to slowing growth in China and other emerging markets.
"The market is trying to discover where it's going next, and we have two possible paths, either we're overwhelmed by the lack of growth and China slams into a hard landing, or China is not slowing as much as people thought," said Wayne Lin, portfolio manager at QS Investors, which oversees $21.6 billion. "What struck me about [the Fed's statement] was the reference to what was going on globally."
Fund managers and traders piled into bets that reflected the belief that interest rates will continue to remain low for a long time.
Banks and asset managers, which were poised to benefit from rising rates, sold off sharply, helping drag the Dow Jones Industrial Average down 290.16 points, or 1.7%, to 16384.58.
The S&P 500 declined 32.17 points, or 1.6%, to 1958.03, and the Nasdaq Composite Index fell 66.72, or 1.4%, to 4827.23.
Among the biggest decliners in the Dow industrials were Goldman Sachs Group and J.P. Morgan Chase, which fell 3% and 2.7%, respectively.
Also contributing to declines were shares of energy companies, which fell as economic-growth concerns triggered a drop in the price of oil. Earlier in the week, oil prices had rallied after an unexpectedly large drop in crude stockpiles. On Friday, crude-oil futures fell 4.7% to $44.68 a barrel, and energy companies in the S&P 500 led the index lower, falling 2.6%.
Higher-yielding stocks such as utilities, which struggled for much of the year as investors entered 2015 with the anticipation of a coming rate increase, ended down 0.6% on Friday. For the week, utilities stocks in the S&P 500 rose 2.5%, compared with the broader index's 0.2% loss. For the year, the sector is down 11%.
In the past month, wild swings have returned to the stock market, sparked by China's move to devalue its currency. The devaluation exacerbated concerns about growth in the world's second-largest economy and what it may mean for economies and markets around the globe.
More than 10.5 billion shares changed hands on Friday, the third-largest daily volume of the year. A host of options and futures contracts expired Friday, which can create a flurry of trading activity and can increase volatility.
Stocks Fall as Federal Reserve Decision Sparks Growth Concerns - WSJ
