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Dow Jones Industrial Average Drops 317 Points, Suffers Monthly Loss; VIX Soars

How traders responded to T-Mobile US Inc's (TMUS) earnings, buyout news

by 7/31/2014 4:34:51 PM
Stocks quoted in this article:

It was a brutal session for the Dow Jones Industrial Average (DJI), which suffered its worst loss in six months due to concerns over labor costs, a potential Argentine default, and weakness in European markets. The Dow was off more than 300 points by the close, finishing at its session low. The S&P 500 Index (SPX) wasn't spared, either; it suffered its worst daily percentage decline since early April, with each of its 10 sectors finishing lower. For the month, the DJI and SPX each lost around 1.5%.

Continue reading for more on today's market, including:

  • Bullish traders pounced on rallying T-Mobile US Inc (NYSE:TMUS), following a solid earnings report and buyout offer from France.
  • One group of option bears doesn't expect the bleeding to stop on Advanced Micro Devices, Inc. (NYSE:AMD).
  • Today's $1 million gamble on Facebook Inc (NASDAQ:FB).
  • Plus ... Employment costs stoke rate-hike worries, jobless claims rise, and eleventh-hour bears target Apple Inc. (NASDAQ:AAPL).
Trading Topic of the Week -- Trading Low-Priced Options: DON'T short-change yourself on time. Compared to a front-month contract, an option with six months of shelf life offers more time for the shares to move as you expect. This extra time provides you a little breathing room to allow the predicted price move to play out.

The Dow Jones Industrial Average (DJI - 16,563.30) sunk 317.1 points, or 1.9%, bringing it into the red on a year-to-date basis. All 30 Dow components ended lower, paced by Exxon Mobil Corporation (NYSE:XOM), which dropped 4.2% on the session. For the month, the DJI lost 1.6%.

The S&P 500 Index (SPX - 1,930.67) plummeted 39.4 points, or 2.0%, resulting in a monthly loss of 1.5%. The Nasdaq Composite (COMP - 4,369.77) suffered an even more severe drop, shedding 93.1 points, or 2.1%; for July, the COMP dipped 0.9%. However, both indexes are still more than 4% higher on the year.

The CBOE Volatility Index (VIX - 16.95) shot up 3.6 points, or 27.2%, for its highest daily close since mid-March. For the month, the VIX gained 46.5%.

CLOSING SUMMARY  INDICES

CLOSING SUMMARY  NYSE AND NASDAQ

5 Items on Our Radar Today:

  1. The Bureau of Labor Statistics' employment cost index saw its largest increase in nearly six years, as it rose by a steeper-than-expected 0.7% in the second quarter. The numbers are heightening concerns that the Fed may be forced to raise short-term interest rates sooner rather than later to fight inflationary pressures. (MarketWatch)
  2. Initial jobless claims rose by 23,000 to a seasonally adjusted 302,000 last week, according to the Labor Department. While the increase was slightly more than projected, underlying job-market conditions still appear to be improving. (CNBC)
  3. Last-minute speculators flooded AAPL's option pits today to pick up weekly puts.
  4. Wall Street responded positively to Yelp Inc's (NYSE:YELP) first-ever quarterly profit ... the market, not so much.
  5. It's been a tough year for 3D Systems Corporation (NYSE:DDD), and things didn't get any better today, following the firm's disappointing second-quarter earnings report.
EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

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