Dow Sheds Nearly 600 Points, S&P 500 in Correction in a Wild Day on Wall Street
U.S. stocks plunged more than 3.5 percent on Monday, closing off session lows in high volume trade as fears of slowing growth in China pressured global markets.
S&P 500 ended nearly 80 points lower, off session lows of about 104 points lower but still in correction territory after the tech sector failed intraday attempts to post gains. Cumulative trade volume was 13.94 billion shares, the highest volume day since Aug. 10, 2011.
The major averages had a volatile day of trade, plunging sharply in the open and more than halving losses to trade less than 1 percent lower on the day, before closing down more than 3.5 percent.
"I think we probably rallied too fast. A lot of people that covered their shorts got their shorts covered," said Peter Coleman, head trader at Convergex. He noted the Dow was still trading several hundred points off session lows and that a close better than 500 points lower would be a good sign.
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"The market's going to be focused on China tonight to see if they come on tonight with something that would be considered a viable (way) to stimulate growth in that economy," said Quincy Krosby, market strategist at Prudential Financial.
The Dow Jones industrial average ended nearly 600 points lower after trading in wide range of between roughly 300 to 700 points lower in the minutes leading up to the close.
In the open, the index fell as much as 1,089 points, making Monday's move its biggest intraday swing in history. In midday trade, the index pared losses to trade about 110 points lower.
The blue-chip index posted its biggest 3-day point loss in history of 1,477.45 points.
During the first 90 minutes of trade, the index traveled more than 3,000 points in down and up moves.
"I'm hoping for some stability here but I think markets remain very, very vulnerable to bad news (out of) emerging markets," said Dan Veru, chief investment officer at Palisade Capital Management.
He attributed some of the sharp opening losses to exchange-traded funds. "It's so easy to move a bajillion dollars in a nanosecond."
Trading in stocks and exchange-traded funds was paused more than 1,200 times on Monday, Dow Jones said, citing exchanges. Such pauses total single digits on a normal day, the report said. An increase or decline of five percent or more triggers a five-minute pause in trading, Dow Jones said.
The major averages came sharply off lows in midday trade, with the Nasdaq off as low as less than half a percent after earlier falling 8.8 percent. Apple traded more than 1.5 percent lower after reversing losses to briefly jump more than 2 percent.
"There was sort of a lack of follow-through after the morning's crazy action in the overall market," said Robert Pavlik, chief market strategist at Boston Private Wealth. "The selling really dissipated once we got to around 10 o'clock."
He attributed some of the late morning gains to a short squeeze and bargain hunting.
Art Hogan, chief market strategist at Wunderlich Securities, noted that the sharp opening losses were due to great uncertainty among traders and the implementation of a rare market rule.
The New York Stock Exchange invoked Rule 48 for the Monday stock market open, Dow Jones reported.
The rule allows NYSE to open stocks without indications. "It was set up for situations like this," Hogan said. The rule was last used in the financial crisis.
Stock index futures for several major indices fell several percentage points before the open to hit limit down levels.
Circuit breakers for the S&P 500 will halt trade when the index decreases from its previous close by the following three levels: 7 percent, 13 percent, and 20 percent.
"Fear has taken over. The market topped out last week," said Adam Sarhan, CEO of Sarhan Capital. "We saw important technical levels break last week. Huge shift in investor psychology."
"The market is not falling on actual facets of a sub-prime situation. It's falling on fear of the unload of China. That's really behind this move," said Peter Cardillo, chief market economist at Rockwell Global Capital.
The CBOE Volatility Index (VIX), considered the best gauge of fear in the market, traded near 40. Earlier in the session the index leaped above 50 for the first time since February 2009.
"When the VIX is this high it means there's some panic out there," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
However, he said with stocks more than halving losses he "wouldn't be surprised if we closed positive." "If you could move it that far you could move it another 350 points" on the Dow," he said.
Overseas, European stocks plunged, with the STOXX Europe 600 down more than 5 percent, while the Shanghai Composite dropped 8.5 percent, its greatest one-day drop since 2007.
Treasury yields came off session lows, with the U.S. 10-year yield at 2.01 percent and the 2-year yield at 0.58 percent.
The U.S. dollar fell more than 1.5 percent against major world currencies, with the euro near $1.16 and the yen stronger at 119 yen versus the greenback.
A U.S. Treasury Department spokesperson said in a statement that "We do not comment on day-to-day market developments. As always, the Treasury Department is monitoring ongoing market developments and is in regular communication with its regulatory partners and market participants."
The Dow transports ended more than 3.5 percent lower to approach bear market territory.
About 10 stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 901 million and a composite volume of 4 billion as of 2:05 p.m.
Crude oil futures settled down $2.21, or 5.46 percent, at $38.24 a barrel, the lowest since February 2009. In intraday trade, crude oil futures for October delivery fell as much as $2.70 to $37.75 a barrel, a six-and-a-half-year low.
Gold futures settled down $6.10 at $1,153.60 an ounce.
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McDonald’s Slims Down in the U.S. for the First Time
For the first time in at least 45 years — and maybe the first time in its history — McDonald’s says that this year it will close more restaurants in the U.S. than it opens.
An Associated Press review of McDonald’s filings with the Securities and Exchange Commission found that the company hasn’t slimmed down the number of restaurants it operates in the U.S. since at least 1970. McDonald’s as we know it was founded in 1955 and grew quickly in its early years, making it likely that 2015 will be the first time it takes down more Golden Arches than it puts up in the U.S.
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McDonald’s does shutter underperforming locations every year, but up until now the number of closings has been outweighed by new openings. The world’s biggest hamburger chain has been struggling to grow sales as consumers turn to chains like Chipotle and Five Guys Burgers and Fries, which market themselves as serving better food and ingredients.
McDonald’s is still growing globally, though. It has about 36,000 locations across the globe and plans to expand that total by about 300 this year. In addition, the chain is still indisputably the country’s largest hamburger chain, with more than twice as many restaurants as its main rival, Burger King.
McDonald’s spokeswoman Becca Hary told the AP that relative to the roughly 14,300 U.S. locations, the net reduction in U.S. stores would be “minimal,” though she declined to give an exact number.
More Money Coming Out of 401(k)s Than In
The amount of money withdrawn from 401(k) plans exceeded the amount contributed to the retirement funds for the first time in 2013, according to a report in The Wall Street Journal.
The shift reflects demographic changes as more Baby Boomer retire from the workforce and begin tapping their savings, and young millennial workers put smaller amounts in.
Consumers may benefit from the trend as fund managers begin cutting fees and changing services in order to entice young workers to sock away more. “It changes the dynamic of the business itself,” J.P. Morgan Chase analyst Ken Worthington told The Journal.
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Company-sponsored 401(k) plans had $4.6 trillion in assets last year, according to the Investment Company Institute.
The average 401(k) balance at the end of the first quarter was $91,800, up 0.5 percent from the fourth quarter of 2014 and up 3.6 year-over-year, according to Fidelity. For employees in a plan for 10 years or more, the average balance was $251,600, up 12 percent year-over-year.
Workers can contribute up to $18,000 in pre-tax dollars to their 401(k) plans in 2015, but most workers—especially younger ones—save far less each year. There are lots of reasons millennials are lagging in retirement savings: large numbers of them are still unemployed or underemployed in jobs that don’t have retirement benefits, and they’re diverting all their extra cash to student loans. Plus, retirement may not be top-of-mind for 20-somethings, no matter how many times they hear about the benefits of compound interest.
Why a Woman Will be on the $10 Bill and Not the $20
The announcement that the Bureau of Engraving and Printing will add a woman to the portrait of Alexander Hamilton on the $10 bill has stirred a lot of conversation as to why the Treasury was not redesigning the $20 bill instead.
It turns out there is a very simple explanation: The move is based on recommendations from the Advanced Counterfeit Deterrence (ACD) Steering Committee.
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"Currency is redesigned to stay ahead of counterfeiting," the US Treasury says. "The ACD Steering Committee recommended a redesign of the $10 note next. The ACD will make its next recommendation based on current and potential security threats to currency notes."
The ACD bases those recommendations on the "current and potential security threats to currency notes," and it turns out that the $10 bill is at a greater threat of being counterfeit than the $20 bill.
Secretary of the Treasury Jack Lew announced the change in a statement on YouTube: "I'm proud to announce today that the new $10 bill will be the first bill in more than a century to feature the portrait of a woman.”
Hamilton will share the note with a woman who Lew is expected to choose by the end of the year. The new bill will enter circulation after 2020.
This article originally appeared on Business Insider.
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FCC Slaps AT&T with $100 Million Fine for Throttling Internet Users
The FCC on Wednesday slapped AT&T hard, proposing a $100 million fine — the largest the agency has ever handed down — for what it described as the phone and broadband giant’s misleading customers about its “unlimited” data plans.
At issue is the practice of “throttling,” or limiting download and upload speeds for some users on those data plans.
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AT&T’s throttling policy had been in place since 2011, according to an FCC statement, and it led to a barrage of complaints to the agency. AT&T targeted users who surpassed a certain data threshold over the course of a month, and consumer complaints argued that AT&T’s limiting of download speeds was directly at odds with the nature of the marketed “unlimited” plans.
AT&T, which is also pursuing government approval of its pending acquisition of DirecTV, says it will “vigorously dispute” the decision. In a statement, the company said that its practice is well documented and shared by many — if not all — service providers, and a legitimate method of managing their network’s resources. The FCC disagrees, claiming that AT&T violated transparency rules by falsely calling these plans unlimited.
"Broadband providers must be upfront and transparent about the services they provide,” said FCC Chair Tom Wheeler in a statement. “The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure."
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AT&T has 30 days to respond before the FCC issues its final decision.
The Federal Trade Commission sued AT&T for $3.5 million in October last year, for the same alleged violation. That case is still ongoing.
The 2016 Presidential Debates Could Become a Slugfest
Few could doubt the impact of nationally televised presidential debates after Republican Mitt Romney set President Obama back on his heels in their first encounter in October 2012.
Romney was articulate and aggressive while Obama appeared frazzled and very much off his game. Romney’s commanding performance helped the former Massachusetts governor briefly energize his floundering campaign and regain its momentum.
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Moreover, with home viewership topping 67 million, the debate -- moderated by Jim Lehrer, the former news anchor for the PBS News Hour – broke a 32-year gross viewership record dating back to the first debate between Democratic President Jimmy Carter and Republican challenger Ronald Reagan in 1980.
Yet amid dramatic changes in political campaign tactics and fundraising and the way Americans consume the news, these televised general election presidential debates actually are suffering from diminished reach.
A new study issued on Wednesday by the Annenberg Public Policy Center at the University of Pennsylvania seemed to compare presidential debates to TV entertainment. Their assessment: the more than two-decade old debate format is to blame for the low viewership among millennials, although baby boomer viewers have increased.
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So what to do? In an era when large audiences pay far more attention to “Game of Thrones,” “House of Cards,” “Master Chef” and “So You Think You Can Dance” than to increasingly lengthy presidential campaign seasons, how can the political parties and the National Presidential Debate Commission jazz up the debates to attract and keep a wider audience?
The Annenberg panel, of course, stops well short of recommending the equivalent of no-holds barred political mudwrestling to heighten audience engagement and sustained interest. The goal, the group says, is to expand and enrich debate content and produce a better informed group of voters.
To that end, the advisory group appears anxious to get rid of the moderator or middle man as much as possible and allow the two candidates to set the agenda and duke it out. They want to get rid of the one or more prominent journalists who set the ground rules and determine the pace and course of the evening’s discussion.
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If, for example, Hillary Clinton were to slam, say, Marco Rubio in a debate, Rubio shouldn’t have to wait patiently for his opportunity to reply but should be allowed to jump in with a rejoinder. Think of it as the resurrection of CNN’s Crossfire.
To add a smidgeon of Jeopardy to the proceedings, each candidate would have a total of 45 minutes to spend to make their case or defend it.
While the candidates would have plenty of opportunity to get their political messages across, they would also have to respond quickly to attacks. A well-scripted candidate wouldn’t necessarily do well in that setting, and the possibility of “oops” moments would be increased. Welcome to reality TV, Beltway style.
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Ah….but dead air is not an option, so a filibuster is off the table. No answer, rebuttal or question could exceed three minutes, according to the panel. When a candidate runs out of total time, he or she has exhausted the right to speak. Remaining time at the end of the moderator-posed topics can be used for a closing statement.
The recommendations are advisory only and it will be up to the presidential debate commission and the national parties to iron out the final ground rules next year.