Weak economic data from China and a steep decline in commodity prices triggered a sell-off in equities, pushing the major indices into negative territory. Two explosions at Boston, near the finish line of the Boston marathon, added to investors’ woes. All the top ten S&P 500 industry groups closed in the red, among which energy stocks suffered the most.
The Dow Jones Industrial Average (DJI) plunged 1.8% to close the day at 14,599.20. The S&P 500 lost 2.3% to finish yesterday’s trading session at 1,552.36. The tech-laden Nasdaq Composite Index decreased 2.4% to end at 3,216.49. The fear-gauge CBOE Volatility Index (VIX) spiked 43.2% to settle at 17.27. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 8.5 billion shares, well above 2012’s average of 6.48 billion shares. Declining stocks outnumbered the advancers. For the 14% that advanced, 84% declined.
All the three major indices, the Dow Jones, the S&P 500 and the Nasdaq fell around 2%. Weaker-than-expected economic data from China triggered a sell-off in equities. World’s second largest economy grew at a pace of 7.7%, slower than the expected rate of 8% in the first quarter. This was also lower than previous quarter’s growth of 7.9%. In addition to weak GDP data, industrial production also slowed in China to 8.9% in March, lower than the expected rate of 10%.
Investors became wary of the global outlook owing to weak Chinese economic data, following which the prices of commodities, especially gold, took a battering. In addition to the economic data, investor sentiment was also dampened by the two blasts which rocked Boston. The blasts took place near the finish line of the Boston marathon.
On the domestic front, according to the Federal Bank of New York, the Empire State manufacturing survey indicated slight improvement in conditions for New York manufacturers. In March, general business conditions dropped six points to 3.1, compared to the consensus estimate of 6.9. This data is also lower that the figure of 9.2 recorded in the previous month. Among the general business conditions, new orders index fell six points to 2.2 while the shipments index fell marginally to 0.8. The unfilled orders index fell by a point to -3.4 while the inventories index was unchanged at -4.6.
According to the National Association of Homebuilders/ Wells Fargo Housing Market Index (HMI), the confidence index for newly built single-family homes in April, decreased by two points to 42. The decrease in confidence is attributable to rising costs of building materials and concerns over supply of developed lots and labor.
SPDR S&P Homebuilders (XHB) lost about 5.0%. Stocks such as PulteGroup, Inc. (NYSE:PHM), Comstock Holding Companies Inc. (NASDAQ:CHCI), D.R. Horton, Inc. (NYSE:DHI), KB Home (NYSE:KBH) and the Ryland Group, Inc. (NYSE:RYL) lost 7.1%, 8.0%, 6.5%, 6.4% and 6.7%, respectively.
On the earnings front, shares of the third-largest U.S. bank, Citigroup Inc. (NYSE:C) gained 0.2% after its revenues and earnings beat the Street’s expectations. The company posted profits on the back of higher loans and credit spreads. The company recorded revenue at $20.81 billion, higher than estimates of $20.17 billion.
Of the top ten S&P 500 industry groups, energy stocks suffered the most. Energy Select Sector SPDR (XLE) lost about 4.1%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Hess Corp. (NYSE:HES), Marathon Oil Corporation (NYSE:MRO), Suncor Energy Inc. (USA) (NYSE:SU) and Chevron Corporation (NYSE:CVX) lost 2.8%, 4.8%, 5.9%, 5.6% and 2.8%, respectively.