Dow Jones Industrial Average Tanks 410 After China Plunge

Wall Street Bloodbath; Plus, Tesla Gets Rocked

Jan 4, 2016 at 12:12 PM
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The Dow Jones Industrial Average (DJIA) is down more than 400 points at midday, tracking the global slump after China's Shanghai Composite was halted on a 7% loss. Meanwhile, the S&P 500 Index (SPX) and Nasdaq Composite (COMP) have both slipped below significant round-number levels -- 2,000 and 5,000, respectively -- and the Institute for Supply Management's (ISM) manufacturing index fell to its lowest reading since 2009.

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Among stocks with unusual option volume at midday is drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX), where calls are crossing the tape at twice their average intraday rate. The stock, which has been the subject of much scrutiny over the last several months, has dropped 4% to trade at $97.55, after high-profile investor Bill Ackman said he sold some 5 million of his shares for tax purposes. Today's put/call volume ratio of 0.22 isn't far off the stock's one-year low of 0.11, seen last June, and the most action is happening on the January 2016 105-strike call, where nearly 14,000 contracts have already traded. However, it looks like most of these calls are being sold to open, meaning the traders are betting on a ceiling for VRX in the near term. 

Lululemon Athletica inc. (NASDAQ:LULU) is one of big winners on the Nasdaq, shrugging off the broad-market slide, up 5.2% at $55.21. The athletic apparel retailer received bullish brokerage notes from Jefferies, Wells Fargo, and J.P. Morgan Securities.

Internet music service Pandora Media Inc (NYSE:P) is among the biggest losers on the Big Board today, off 7.6% at $12.39, thanks to negative analyst attention. Traders have also been betting against P recently, as short interest in the security has jumped 29% during the last two reporting periods to make up more than 16% of Pandora's available float -- hardly surprising, considering the stock has underperformed the S&P 500 Index (SPX) by nearly 40 percentage points over the last three months. 

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The CBOE Volatility Index (VIX) is up 4.3 points, or 23.7%, at 22.52.

Today's put/call volume ratio on the SPDR S&P 500 ETF Trust (SPY) is 1.83, with puts significantly outnumbering calls. SPY was last seen down 5.1 points, or 2.5%, at $198.80 -- its lowest level since early October.

 

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