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Dow Falls 1,000 Points, Enters Correction Territory as Volatility Ramps Back Up

Stocks are on pace for another huge weekly loss

Feb 8, 2018 at 4:29 PM
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The Dow made another outsized move today, eventually spiraling to a 1,000-point loss and entering correction territory. It was a similar setup on the S&P 500 and Nasdaq, too, which each lost more than 3%. Stocks were again rocked by a big spike in volatility, with the VIX jumping back atop the 30 handle. The risk-off session was sparked by more fears of rising interest rates -- with the 10-year Treasury yield holding near four-year-high territory -- overshadowing strong earnings from high-profile names like Twitter (TWTR). Political uncertainty only added to the bearish backdrop, with Congress still scrambling to pass a short-term spending measure to avoid a government shutdown as the midnight deadline looms.

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

  • A nearly $2 million options bet on the tech sector.
  • The FAANG stock flashing a buy signal after the sell-off.
  • Volatility expectations are historically high on CBOE stock before earnings.
  • Plus, Hertz stock could rally; big options profits from one beer stock; and identifying trader sentiment with options. 

The losses mounted as the day wore on for the Dow Jones Industrial Average (DJI - 23,860.46), eventually settling down 1,032.89 points, or 4.2%. Not a single Dow component closed higher, with American Express (AXP) suffering the biggest loss of 5.6%.

The S&P 500 Index (SPX - 2,581.00) fell 100.66 points, or 3.8%, and the Nasdaq Composite (IXIC - 6,777.16) declined 274.83 points, or 3.9%.

The CBOE Volatility Index (VIX - 33.46) shot up 5.7 points, or 20.7%.

Closing Indexes Summary Feb 8

NYSE and nasdaq Stats Feb 8

5 Items on Our Radar Today

  1. While the Senate appears ready to pass a two-year spending bill to keep the government open, it's not clear if there will be enough support in the House of Representatives to pass. Plus, Senator Rand Paul, R-Ky., is already objecting to the measure, asking Congress to restore budget caps to limit spending. (USA Today)
  2. Walmart is asking vendors for more products priced above $10, as it tries to extract larger profits from its e-commerce business. Unnamed sources told Reuters the retail giant is trying to avoid selling merchandise online for a loss, unlike rival Amazon. (Reuters)
  3. Why Hertz stock could zoom higher.
  4. Put traders made a killing on this beer stock.
  5. Using options to find investor sentiment extremes.

Corporate Earnings Feb 8

Unusual Options Activity Feb 8

Data courtesy of Trade-Alert

Crude Falls For Fifth Straight Session

The price of oil fell for a fifth straight session -- the longest daily losing streak since April. March-dated crude closed down 34 cents, or 0.6%, at $61.45 per barrel.

Gold, on the other hand, got a lift today, thanks to the slide in equities and weakness in the U.S. dollar. April gold futures added $4.40, or 0.3%, to close at $1,319 per ounce.

 

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