A powerful sell-off that started last week in the wake of expectations that the Federal Reserve will begin tapering its quantitative easing program at the September FOMC meeting picked up more steam on Monday.
Federal Reserve Bank of Dallas President Richard Fisher urged the FOMC to go ahead with plans to scale back its bond-buying program and not give in to market pressure opposing the move. In the wake of the announcement, stocks, bonds, and commodities have all recorded sharp losses, as investors show their concern about how the economy will perform in the absence of stimulus.
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Although the major averages finished well-off their lows of the session, the Dow still fell around 140 points and both the S&P and Nasdaq recorded losses of more than 1 percent.
The Dow Jones Industrial Average lost 140 points, or 0.94 percent, to close just below 14,660.
The S&P 500 fell 19 points, or 1.21 percent, to finish at 1,573.
The Nasdaq shed 36 points, or 1.09 percent, to 3,321.
Crude oil recorded gains to start the week on Monday, with the Brent/WTI spread tightening. NYMEX crude futures rose 1.56 percent to $95.15 while Brent crude contracts added 0.25 percent to $101.16 late in the day. Natural gas futures lost $0.03, or 0.77 percent, to $3.74.
Precious metals continued their fall on the session. At last check, COMEX gold futures were down 0.61 percent to $1,284.10. Silver contracts were last trading lower by 1.45 percent to $19.67. Copper also fell on the session, and was last down 1.65 percent to $3.0490.
In the grains complex, both corn and wheat were lower. Corn contracts fell 1.75 percent while wheat was down 2.45 percent. Movers in soft commodities included sugar and cotton. Sugar futures added 1.24 percent while cotton was down a little less than 2 percent.
Treasury prices actually traded higher on Monday, but remain in a steep downtrend, causing interest rates to rise. Near the close of equities, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) was up 0.54 percent to $108.96.
Yields, which have been moving aggressively higher over the last month, were as follows: The 2-Year Note yield was at 0.39 percent while the yield on the 5-Year Note was sitting at 1.45 percent. Yields on the 10-Year Note and 30-Year Bond were 2.54 percent and 3.56 percent, respectively.
The U.S. Dollar, which has been rising amid the sell-off in stocks, was slightly higher on the day. At last check, the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was up 0.07 percent to $22.35.
The closely watched EUR/USD pair was last down 0.13 percent to $1.3123. Overall, volatility was limited in the currency market on Monday. Other movers included the USD/CAD, which rose 0.35 percent, and the AUD/USD, which was trading up 0.28 percent.
Volatility and Volume
The VIX rose another 6 percent to 20.03 and is trading at the high-end of its 52-week range. The widely watched measure of volatility expectations could see more gains this week as investor uncertainty rises.
Volume remained very heavy as recent trading sessions have been the most active of the year. Around 207 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands on Monday compared to a 3-month daily average of around 140 million.
Shares of Vanguard Health Systems (NYSE:VHS) skyrocketed on Monday morning after Tenet Healthcare (NYSE:THC) agreed to buy the company for a big premium. The deal, valued at $1.73 billion, sent Vanguard up 68 percent while Tenet shares added around 5 percent.
Isis Pharmaceuticals (NASDAQ:ISIS) hit a new 52-week high after reporting positive Phase II clinical trial data for a drug being tested in the treatment of high triglycerides and type 2 diabetes.
Shares of FleetMatics (NYSE:FLTX) had climbed around 11 percent in afternoon trade, although the reason for the move was not immediately clear.
Keynote Systems (NASDAQ:KEYN) rose almost 47 percent after the company agreed to be acquired by private equity firm Thoma Bravo LLC for $20 per share in cash, or roughly $395 million.
Revlon (NYSE:REV) added almost 8 percent near the close after a positive mention in Barron's over the weekend.
Hercules Offshore (NASDAQ:HERO) rose around 6 percent after the company increased its stake in Discovery Offshore and divested of almost all of its domestic lifeboat assets for $54 million in cash. The company's stake in Discovery now gives it a majority interest.
Shares of Chinese ADR YY Inc (NASDAQ:YY) had lost more than 13 percent near the close. The company went public last November and the stock has rallied sharply in recent months.
Allergan (NYSE:AGN) shares fell more than 11 percent after the stock was downgraded at both Deutsche Bank and Leerink Swann.
Coal name Alpha Natural Resources (NYSE:ANR) fell roughly 8 percent on Monday amid weak sentiment in the beleaguered coal sector. Other losers included Cliffs Natural Resources (NYSE:CLF), which fell nearly 8 percent, and Peabody Energy (NYSE:BTU), which was down 7 percent.
Facebook (NASDAQ:FB) fell more than 2 percent on Monday after the company disclosed a security lapse on Friday that exposed the contact information of around six million users.
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