Volatility Ramps Up as Dow Jones Industrial Average Sinks

It was another day of triple-digit trading for the Dow Jones Industrial Average (INDEXDJX:DJI); however, unlike yesterday's session, all of today's action was to the downside. There were a number of factors contributing to the risk-off backdrop, including a post-earnings plunge for one blue-chip banking name, an uninspiring global growth outlook from the World Bank, and a dreary reading on retail sales. At its session low, the DJI was off almost 350 points, and although the index pared a significant portion of these losses near the close, it still finished sharply lower for a fourth consecutive day.

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

• A steep drop in copper sent Freeport-McMoRan Inc (NYSE:FCX) and Southern Copper Corp (NYSE:SCCO) reeling, but their troubles could be far from over.
• Optimism is building on Citigroup Inc (NYSE:C) and Bank of America Corp (NYSE:BAC) ahead of tomorrow morning's fourth-quarter earnings reports.
• In case you missed it, why our Senior VP of Research, Todd Salamone, is keeping a close eye on the SPDR S&P 500 ETF Trust (SPY) at 200 heading into Friday's options expiration.
• Plus ... The Fed's warning about one threat to the economy, retail sales disappoint, and a lesson in implied volatility.

The Dow Jones Industrial Average (DJI - 17,427.09) spent the entire session in the red, closing with a loss of 186.6 points, or 1.1%. Of the Dow's 30 components, 27 settled lower, led by JPMorgan Chase & Co.'s (NYSE:JPM) 3.5% plunge. Merck & Co., Inc. (NYSE:MRK) paced the three advancers with its 0.7% gain.

The S&P 500 Index (SPX - 2,011.27) was down nearly 35 points at its session low, but found support in the 2,000 region to settle with an 11.8-point, or 0.6%, loss. The Nasdaq Composite (COMP - 4,639.32) fared the best of its peers, closing down 22.2 points, or 0.5%.

The CBOE Volatility Index (VIX - 21.48) jumped 0.9 point, or 4.5%, to notch its highest daily close since Dec. 16.

5 Items on Our Radar Today:

1. Despite "modest" to "moderate" growth in the 12 Federal Reserve districts, the central bank cited a drop oil prices as a threat to the economy in its latest Beige Book. Specifically, while falling gasoline prices could help consumers, it poses a greater risk to energy companies that may be forced to slow hiring or lay off workers to compensate for falling profits. (CNBC)
2. Retail sales fell by a larger-than-expected 0.9% in December -- impacted by a swoon in consumer purchases and a drop in gasoline prices. Core sales -- which excludes automobiles and gasoline -- declined 0.4%. Not all retailers were impacted by a slow holiday season, though, with GameStop Corp. (NYSE:GME) rallying more than 10% in the wake of its holiday sales numbers. (Reuters)
3. How implied volatility may have played a role in the pre-earnings activity seen in Xilinx, Inc.'s (NASDAQ:XLNX) options pits today.
4. Car concerns General Motors Company (NYSE:GM) and Tesla Motors Inc (NASDAQ:TSLA) sold off today in the wake of words from their respective CEOs.
5. A beginner's guide -- or a quick refresher -- on the advantages of buying call options.

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

Commodities:

Crude oil took a big bounce today, as bargain hunters overlooked a bigger-than-expected rise in domestic inventories. By session's end, crude for February delivery was up $2.59, or 5.6%, at $48.48 per barrel.

Gold eked out a win, thanks to its safe haven status. At the close, the February-dated contract was 10 cents higher at $1,234.50 per ounce. Copper, meanwhile, continued to pan five-year lows, with copper for March delivery -- the most active contract -- shedding 14 cents, or 5.3%, to $2.51 per pound.