Stocks took a nosedive today as investors fretted over the health of European banks and weighed the Federal Reserve’s gloomy economic outlook against hints of further actions.
The Dow Jones Industrial Average plunged 519.83 points, or 4.62 percent, to 10719.94, more than reversing the previous day’s exuberant gains. The Standard & Poor’s 500-stock index slid 51.77 points, or 4.42 percent, to 1120.76, and the Nasdaq Composite lost 101.47 points, or 4.09 percent to 2381.05.
All 30 of the Dow components and all 10 of the S&P 500 sectors were in negative territory, with just a handful of S&P 500 components in positive territory. In a reflection of investor concern, the CBOE Market Volatility Index, the “fear gauge” known as the VIX, surged 18 percent, though it was off its highest levels of the day.
Leading the declines were financial stocks, with Citigroup falling 8.9 percent, Bank of America off 7.9 percent, J.P. Morgan Chase down 4.1 percent, and American Express shedding 5.8 percent.
Walt Disney was the steepest decliner among the Dow components, tumbling 8.2 percent after the blue-chip media and entertainment conglomerate reported results that topped analyst expectations, but raised analyst concerns about decelerating advertising rate growth.
In Europe, stocks fell broadly as worries continued to surround Italian and Spanish government bonds, as well as some banks on the Continent.
The European Central Bank bought Italian and Spanish government bonds for a second day in a row, stabilizing borrowing costs for both countries and easing concerns for the moment that Europe’s debt crisis will spread to its larger countries.
Amid the volatility, gold futures surged Wednesday to settle at a fresh record of $1,781.30 an ounce. Crude-oil futures surged 4.5 percent to settle at $82.89 a barrel.
The US dollar fell against the yen, but rose sharply against the euro, trading at $1.4190. The dollar also bounced against the Swiss franc, after hitting an all-time low against the currency on Tuesday.
Treasurys were bid higher, sending the yield on the benchmark 10-year note down to 2.1177 percent.
The economic calendar was relatively light. The inventories of US wholesalers climbed a less-than-expected 0.6 percent in June, a sign of caution among businesses about the prospects for the economy.
Read more at The Wall Street Journal