U.S. stocks spent the session swimming in red ink today, thanks to amplified fears about the health of the global economy. Economists at Morgan Stanley got the bearish ball rolling right out of the gate, dropping the "R" word and cutting their global growth forecasts for this year and next. Meanwhile, a round of lackluster earnings reports -- as well as a batch of abysmal economic data -- added salt to Wall Street's wounds. Most notably, initial jobless claims jumped above the benchmark 400,000 level, existing home sales sank to an eight-month nadir, and the Philly Fed index tumbled to its lowest level since March 2009. As the bearish stars aligned, both the Dow Jones Industrial Average (DJIA) and Nasdaq Composite (COMP) swallowed steep triple-digit deficits, while the S&P 500 Index (SPX) gave up 4.5% by the close. On the flip side, the CBOE Market Volatility Index (VIX - 42.67) -- or the market's "fear barometer" -- skyrocketed more than 35%, while a massive flight to safety sent gold futures to another all-time best.
The Dow Jones Industrial Average (DJIA – 10,990.58) gave up 419.6 points, or 3.7% -- surrendering both the 11,000 level and its short-lived perch atop its 10-day moving average. Among the index's 30 components, only Wal-Mart Stores (WMT) eked out a win, adding 0.5%. Meanwhile, Alcoa (AA) paced the bearish majority, tumbling 6.1% by the time the dust settled.
Similarly, the S&P 500 Index (SPX – 1,140.65) fell 53.2 points, or 4.5%, to end beneath its own 10-day trendline for the first session in four. Finally, the Nasdaq Composite (COMP – 2,380.43) suffered the worst of the three, shedding 131.1 points, or 5.2%, to settle south of both its 10-day moving average and the 2,500 level.
Crude oil futures plummeted today, as global economic concerns fueled fears of fizzling demand. Furthermore, data showing a sharp contraction in Mid-Atlantic manufacturing activity pointed to a potential drop in industry-level energy usage, which also dragged on black gold. By the time the dust settled, September-dated crude oil futures surrendered $5.20, or 5.9%, to end at $82.38 per barrel.
Gold futures, on the other hand, skyrocketed to a new record high today, as worldwide economic jitters sparked a widespread flight to safety. Specifically, talk of a potential recession and a batch of abysmal domestic data evaporated investors' risk appetite, with traders shunning stocks in favor of tangible assets like gold. Against this backdrop, December-dated gold futures advanced $28.20, or 1.6%, to settle at an all-time closing best of $1,822 an ounce. Earlier in the session, the precious metal topped out at $1,829.70 an ounce.
Levels to Watch in Trading:
Dow Jones Industrial Average (DJIA – 10,990.58) - support at 10,500; resistance at 13,000
S&P 500 Index (SPX – 1,140.65) - support at 1,100; resistance at 1,400
Nasdaq Composite (COMP – 2,380.43) - support at 2,100; resistance at 2,900
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