U.S. stocks joined a global selloff, erasing the year’s gains in the Dow Jones Industrial Average, as Exxon Mobil Corp. to Micron Technology Inc. tumbled amid weaker corporate results.
Exxon and Murphy Oil Corp. dropped amid concern over output. Micron slid 6.1 percent after earnings from Samsung Electronics Co., the world’s biggest smartphone maker, trailed estimates. Nike Inc. declined 3.1 percent as its European rival Adidas AG slashed its full-year forecast. Sprint Corp. tumbled 5.3 percent, leading losses among phone stocks as France’s Iliad SA offered to buy a stake in T-Mobile US Inc.
The Dow fell 317.06 points, or 1.9 percent, to 16,563.30 at 4 p.m. in New York, for the largest one-day retreat since Feb. 3. The Standard & Poor’s 500 Index slid 2 percent, the most since April 10, to 1,930.67. The gauge dropped 1.5 percent in July, its first monthly decline since January. The Nasdaq 100 Index lost 2.1 percent. The MSCI All-Country World Index tumbled 1.5 percent for its worst loss in almost six months.
“The Fed is stepping out of the way and the market’s valuation is high enough that people are quick to take profit,” Wayne Wilbanks, who oversees $2.5 billion as chief investment officer at Wilbanks, Smith & Thomas Asset Management LLC in Norfolk, Virginia, said in a phone interview. “You are going to get more days like today, where investors are more trigger happy, quicker to liquidate. Everybody knows a correction is coming and it will come.”
The S&P 500, which is up 4.5 percent this year and reached a record on July 24, has gone without a 10 percent correction since 2011. It trades at 17.6 times the reported earnings of its companies, near the highest level since 2010.
The benchmark index had climbed 0.5 percent in July through yesterday as companies from Facebook Inc. to Chipotle Mexican Grill Inc. reported a surge in profit, while Time Warner Inc. rallied as Rupert Murdoch’s 21st Century Fox Inc. made a takeover offer.
Market volatility is rising after the S&P 500 ended its longest stretch of calm since 1995. Including today, the index has posted gains or losses of more than 1 percent three times in the past two weeks, compared with none during the 62 days through July 16, data compiled by Bloomberg show.
The Chicago Board Options Exchange Volatility Index, known as the VIX, surged 27 percent today to 16.95, the highest level since April 11.
The S&P 500 closed below its average price over the past 50 days for the first time since April. More than 7.9 billion shares changed hands on U.S. exchanges, the highest level since June 27.
Fifty S&P 500 companies report quarterly earnings today. About 76 percent of those that have released results this seasons have topped analysts’ estimates for profit, while 66 percent have exceeded sales projections.
Global equities fell today amid weaker-than-projected earning from Europe and Asia. Deutsche Lufthansa SA and Adidas were among European companies sliding as they cited unrest between Russia and Ukraine for dimming growth prospects.
Banco Espirito Santo SA plunged by the most on record and the bonds slumped after the Portuguese lender was ordered to raise capital following a 3.6 billion euro ($4.8 billion) first-half net loss.
“Maybe the market is getting a little bit tired here,” David Chalupnik, the head of equities at Nuveen Asset Management in Minneapolis, said by phone. His firm runs about $120 billion. “It’s more concern around Europe. We’ve had an extremely easy monetary environment for the past six years. When that changes, it’s going to cause a lot of anxiety.”
Concern grew that the improving economy may force the Federal Reserve to raise interest rates sooner than expected.
U.S. gross domestic product expanded at a 4 percent annual pace in the second quarter, confirming the central bank’s view that a first-quarter contraction was transitory. Data today showed fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than eight years, signaling employers are hanging on to workers as demand improves.