Dow Jones Industrial Average Drops 394, Ends Worst Week Since January

The Indicator Showing We're Nowhere Near a Market Top

Sep 9, 2016 at 4:25 PM
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The Dow Jones Industrial Average (DJIA) fell hard, giving up almost 400 points to mark its largest single-day sell-off since the late-June "Brexit" vote. Likewise, the S&P 500 Index (SPX) snapped its longest quiet streak in years (as this indicator predicted), and the CBOE Volatility Index (VIX) -- or the market's "fear gauge" -- skyrocketed well above this critical level.

Rate-hike fears flared following hawkish Fed talk from Boston's Eric Rosengren, who said delaying interest rate hikes could harm the U.S. economy. While Dallas Fed President Rob Kaplan and Fed Governor Daniel Tarullo were more dovish, sticking to the "data-dependent" line, the idea that a rate increase is still a possibility at this month's Federal Open Market Committee (FOMC) meeting sent the dollar higher against a basket of foreign currencies. Also weighing on stocks was a pullback in crude futures, which erased most of Thursday's gains, as well as a defiant North Korea

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

The Dow Jones Industrial Average (DJIA - 18,085.45) dropped 394.5 points, or 2.1%, for its worst day in more than two months. Verizon Communications Inc. (NYSE:VZ) led all 30 components lower, giving up 3.3%. For the week, the DJIA slipped 2.2% -- its worst week since early January.

The S&P 500 Index (SPX - 2,127.81) gave back 53.5 points, or 2.5%, for the day, and dipped 2.3% on a weekly basis -- its worst week since February. The Nasdaq Composite (COMP - 5,127.12) shed 132.37 points, or 2.5%, bringing its weekly loss to 2.4% -- the steepest since April.

The CBOE Volatility Index (VIX - 17.50) soared nearly 5 points, or 39.9%, to its highest finish since late June. For the week, the VIX rose 46.1% -- its biggest gain since January.

Indexes Closing Summary September 9

NYSE and Nasdaq Stats September 9

5 Items on Our Radar Today:

  1. Adding to a rough week for Apple Inc. (NASDAQ:AAPL) are reports that the company is already running into supply issues in its first day of iPhone 7 preorders. Specifically, customers have reported shipping dates delayed as far as November for the phone's most popular versions and new colors. (MarketWatch)
  2. South Korean Hanjin Shipping is ready to unload four U.S.-bound vessels, after telling a U.S. Bankruptcy Court in New Jersey the company has money to pay for the service. The ships have been stranded at sea carrying some $14 billion worth of cargo since Hanjin filed for bankruptcy last week. (Reuters via CNBC)
  3. How can implied volatility help you maximize profits? Schaeffer's Quantitative Analysts Rocky White and Chris Prybal explain.
  4. Seagate Technology PLC (NASDAQ:STX) options flew off the shelves after a new activist investor stake.
  5. Why a new partnership with Apple Inc. (NASDAQ:AAPL) has been nothing but trouble for this blue-chip stock.

Quarterly Earnings September 9

Unusual Options Activity September 9
Data courtesy of Trade-Alert

Commodities:

Oil prices spent the day backtracking after Thursday's huge rally, weighed down by a stronger dollar and expectations for a rebound in domestic supplies. For the day, October-dated crude oil dropped $1.74, or 3.7%, to close at $45.88. Still, black gold added 3.2% for the week, with traders hoping Saudi Arabia and Russia will cooperate on output and stabilization measures later this month.

Hawkish comments from Fed officials and a subsequently stronger dollar caused gold prices to drop off sharply, as traders considered a chance that an interest rate hike may still be on the table this month. Gold for December delivery slipped $7.10, or 0.5%, to $1,334.50 an ounce today, ending the week up 0.6%.

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