US stocks plunge, wiping out July's gains

Stocks plunge, wiping out July gains; Market logs first loss since January


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For investors, there were few havens on Thursday.

The stock market had its worst one-day drop since February, driven down by a confluence of worries, from weak company earnings to the looming end of stimulus from the Federal Reserve.

But it wasn’t just stocks that suffered; oil fell to its lowest level since March, gold dropped and even Treasury notes edged lower.

Stocks of Pittsburgh regional companies did not avoid the broad decline, with only seven companies in the Post-Gazette/​Bloomberg index of 57 local stocks managing gains.

The biggest loser was North Huntingdon 3-D printer ExOne Company, whose shares toppled $4.37 to finish at $32.71. Disappointing earnings announced by one of its competitors, 3D Systems, contributed to the slide.

Earnings that fell below Wall Street estimates sent shares of Kennametal down 4 percent. The Latrobe tool maker closed at $42.28, down $1.97.

Other losers included Lawrence-based digital equipment provider Black Box, off 93 cents to $20.70; L.B. Foster of Green Tree, down $1.81 to $46.65; and Downtown investment manager Federated Investors, off 99 cents to $28.22.

U.S. Steel shares continued advancing after better than expected earnings sent the steelmaker’s shares up 19 percent Wednesday. They added another 46 cents to close at $33.49.

Stocks started the day lower after a dose of bad earnings news, and the losses accelerated throughout the day.

Whole Foods Market and Exxon Mobil were among companies that fell after reporting results or forecasts that disappointed investors.

The stock market has been on a bull run for more than five years, with the most recent leg of that surge pushing the Standard & Poor’s 500 index to an all-time high a week ago. Investors are now getting concerned stocks may have climbed too far and reflect too much optimism on the outlook for growth.

“We’ve been on a strong run,” said Jerry Braakman, chief investment officer at First American Trust. “There’s just more concern that stock valuations are rich compared to historical norms.”

The S&P 500 dropped 39.40 points, or 2 percent, to 1,930.67, its biggest loss since April 10. The drop pushed the index to its first monthly loss since January.

The Dow Jones industrial average plunged 317.06 points, or 1.9 percent, to 16,563.30. The Nasdaq composite fell 93.13 points, or 2.1 percent, to 4,369.77. The Russell 2000, an index of small company stocks, plunged 26.50 points, or 2.3 percent, to 1,120.07

Exxon Mobil stock fell $4.31, or 4.2 percent, to $98.94 after the energy company said oil and gas production slipped 6 percent, disappointing analysts. The decline was driven by the expiration of rights to a field in Abu Dhabi and natural field declines.

Investors are also concerned about the outlook for growth in Europe as tensions escalate between the European Union and Russia after the downing of a passenger plane over Ukraine. The European Union on Thursday revealed the details of broad economic sanctions against Russia.

The main driver behind Thursday’s sell-off was a reassessment of the outlook for interest rates in the U.S., said Paul Zemsky, chief investment officer of Multi-Asset Strategies and Solutions at Voya Investment Management.

Fed policymakers said the central bank would make further cuts to its monthly bond purchases, a program that is intended to keep long-term interest rates low and encourage borrowing and spending. Policy makers are also becoming more optimistic about the outlook for the U.S. economy after growth expanded by a better-than-expected 4 percent in the second quarter.

“We’re closer to the first move higher in interest rates,” said Mr. Zemsky. “And there’s definitely a camp that believes that the only reason that we’re at these levels is because the Fed has kept the rates at zero.”

Gold fell $13.60, or 1.1 percent, to $1,281.30 an ounce. Silver fell 19 cents, or 0.9 percent, to $20.41 an ounce.

Benchmark U.S. crude fell $2.10 to close at $98.17 a barrel in New York, its lowest level since March 17. Oil’s high for the year was $107.26, set on June 20; its low was $91.66, set on Jan. 9.

Brent crude, a benchmark for international oils used by many U.S. refineries, fell 49 cents Thursday to close at $106.02 in London.

Prices for U.S. government bonds were little changed. The yield on the 10-year Treasury note edged up to 2.57 percent from 2.56 percent on Wednesday.

United States - North America - European Union - Exxon Mobil Corporation - Whole Foods Market Inc

Post-Gazette Staff Writer Len Boselovic and Associated Press Reporters Steve Rothwell and Kay Johnson contributed to this report.


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