Markets Right Now: Dow falls another 500, then recovers

Markets Right Now: Dow falls another 500, then recovers

The Dow briefly crossed into correction territory earlier in the day's trading, down more than 10 percent since its January 26 high.

US stocks fell in volatile trading on Tuesday, as a pullback from record highs steepened following the biggest one-day declines for the S&P 500 and Dow in more than six years.

The consensus among investors remains that interest rates and inflation concerns are among the reasons for the market volatility.

"What Americans are witnessing now is...a return to normal market behavior, which has never followed a straight line", Ruchir Sharma, the chief global strategist at Morgan Stanley Investment Management, wrote in the New York Times on Tuesday.

The Dow Jones Industrial Average fell more than 500 points at the opening of the New York Stock Exchange on Tuesday, a day after it plunged a record 1,175 points, but the index quickly recouped its losses and entered positive territory.

The third idea to understand is that any dramatic drop or rise in the stock market affects relatively few people in the U.S. Many families have no savings, and, among those that have saved, not all have invested in the stock market. The Standard & Poor's 500 index, a broader market barometer that many index funds track, lost 18 points, or 0.7 percent, to 2,630. The Dow is up 24 percent over that time, the S&P 500 18 percent.

The S&P 500 index recorded its biggest daily drop in over six years on Monday, and the VIX index shot up to its highest level since August 2015, breaking out of a historically low range. The Dow is still up 20 per cent over that time, the S&P 500 15 per cent.

The Nasdaq Composite dropped 1.4% out of the starting gate, then climbed into narrow gains as Apple (AAPL) surged 1.5% and all of the FANG stock tech leaders reversed early losses into gains.

Stocks closed sharply higher on Wall Street after another turbulent day of steep ups and downs.

Market participants remain hopeful that this week's steep falls in share prices will prove to be a healthy and temporary correction following a lengthy period of solid gains.

Investors Catching Stocks Bank of America Corporation (BAC)
Kingdon Cap Management Lc accumulated 239,444 shares or 0.4% of the stock. 59,799 are held by Ballentine Ptnrs Limited Liability. This ratio ranks in the 95th annual percentile, indicating this rate of call buying relative to put buying has been extreme.

While some traders warn that a "buy the dip" mentality may be coming to an end after a nine-year stock rally, strategists who remain bullish on US stocks say economic growth remains on track.

Bond yields turned higher after a sharp drop Monday.

Investors will keep an eye on comments from St. Louis Fed President James Bullard who will give a presentation on the US economy and monetary policy. Falls like this have not been registered since August 2011 when investors were fretting over Europe's debt crisis and the debt ceiling impasse in Washington that prompted a USA credit rating downgrade. That's after it spiked by a record 116% on Monday, to the highest level in more than two years.

Fidelity International portfolio manager Kate Howitt said there had been a shift where signs of strength now anxious investors. That hurt banks by sending interest rates lower, which means banks can't charge as much money for mortgages and other types of loans. "Corrections are caused by people having to reposition for new environments".

Investors have also been nervously watching the bond market, where yields have been creeping higher. Japan's Nikkei 225 fell 4.73 percent Tuesday and China's Shanghai SE Composite Index was down 3.35 percent. "There's a coherence of price action and when you get 440 days of trading without a 1 percent down day, you're at risk for a correction". By the close of trading, the FTSE 100, which captures Britain's largest companies, had fallen 2.6 percent, Germany's DAX had tumbled 2.3 percent and France's CAC 40 had dropped 2.4 percent.

In other commodities trading, copper fell 3 cents to $3.19 a pound.

But in percentage terms, the declines of Friday and Monday are nowhere near the worst.

Bond prices rose. The yield on the 10-year Treasury fell to 2.73 percent. Brent crude, the benchmark for global oil prices, lost 76 cents, or 1.1 percent, to $66.86 a barrel in London. Brent crude, the benchmark for worldwide oil prices, rose 36 cents to $67.22 a barrel in London.

The U.S. dollar was barely up against a basket of currencies, paring gains as Wall Street rallied late.

On the currency markets, the pound was flat at 1.395 against the USA dollar and was 0.1% lower versus the euro at 1.127. The last fall of that size came in August 2011 when investors were fretting over Europe's debt crisis and the debt ceiling impasse in Washington that prompted a USA credit rating downgrade.

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