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Wall Street dropped sharply in volatile trading amid persistent worries about the fiscal cliff, global economy and rising tension in the Middle East.
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As of 3:30 p.m. ET, the Dow Jones Industrial Average fell 158 points, or 1.2%, to 12600, the S&P 500 dropped 15.9 points, or 1.2%, to 1359 and the Nasdaq Composite slumped 30.4 points, or 1.1%, to 2854.
The markets made a fairly swift turnaround after the positive open. Every S&P 500 sector was recently to the downside. Industrials, such as Boeing (NYSE:BA), took a particularly heavy thrashing. Materials, like Potash (NYSE:POT), and financials, such as Bank of America (NYSE:BAC), tumbled as well.
The Nasdaq slid into correction territory, falling 10.7% from an intraday high of 3196 on September 21.
Still, there were a handful of bright spots. Cisco (NASDAQ:CSCO) shares zoomed close to 5% higher in pre-market action after the company reported fiscal first quarter profits and revenues that beat Wall Street's expectations. Fellow tech giant Hewlett-Packard (NYSE:HPQ) also posted solid gains on the day.
Middle East Tension Heats Up
News that Israel fired several rockets into Gaza, killing a top Hamas military commander also came as a concern for market participants. In particular, market participants worried about the prospects of a new armed conflict in the highly-volatile region that also produces a large swath of the world's oil.
Indeed, oil prices got a big boost from the rising tension in the Middle East. The benchmark oil contract rallied 94 cents, or 1.1%, to $86.32 a barrel. Wholesale New York Harbor gasoline gained 0.95% to $2.679 a gallon. Gold gained $5.30, or 0.31%, to $1,730 a troy ounce.
A Full Economic Docket
Market participants had no lack of economic news to parse through.
Members of the Federal Reserve’s policy-setting committee considered methods of tying interest rate moves to quantitative and qualitative economic targets as opposed to the current date-based forward guidance, minutes from the FOMC’s last meeting show. The FOMC also continued seeing the economy expanding at a “moderate pace” and noted downside risks caused by the looming fiscal cliff and strains in global financial markets.
The Commerce Department said U.S. retail sales fell 0.3% in October from September, more than the 0.2% decline expected, and the first drop since June. Excluding the auto segment, sales were unchanged from September. Economists were expecting a 0.2% gain. Hurricane Sandy had a negative and positive impact on sales, according to the Commerce Department.
A separate report at the same time from the Labor Department showed producer prices fell 0.2% in October from September, surprising economists who were expecting a 0.2% gain. Excluding the food and energy components, prices were down 0.2%, the biggest drop since October 2010. Economists were expecting a 0.1% gain.
Lastly, business inventories rose 0.7% in September from August, slightly better than the 0.5% gain expected. Inventories are generally seen as a forward-looking indicator of expected demand.
Market participants will also been watching Washington, where President Obama is set to hold his first news conference since being elected for a second term. With the fiscal cliff looming just weeks away, Wall Street has been paying especially close attention to events in the White House and on Capitol Hill.
In other corporate news, Facebook (NASDAQ:FB) shares surged despite a lockup on 777 million shares ending. Starbucks (NASDAQ:SBUX) also unveiled plans to buy Teavana (NYSE:TEA) for $620 million in cash.
The Euro Stoxx 50 dipped 0.81% to 2473, the English FTSE 100 sold off by 1.1% to 5722 and the German DAX slumped 0.94% to 7102.
In Asia, the Japanese Nikkei 225 ticked up by 0.04% to 8665 and the Chinese Hang Seng rallied 1.2% to 21442.