The selling in the U.S. stock market picked up steam during the Monday trading session as the Dow Jones Industrial Average was falling as much as 338 points to 15,866 and the Nasdaq was dropping 114 points to 4,248.
Part of the problem for the U.S. market was the destruction in European bank stocks as Deutsche Bank dropped over 10 percent and Germany’s Commerzbank fell 9.5 percent. The worry that European banks are in trouble is spilling over into the U.S. market.
“Bad news begets bad news, which begets fear and people are just getting out of the way,” said Keith Bliss, senior vice president at Cuttone & Company.
Italy’s stock market closed down almost 5 percent on Monday to 16,406 on worries about a fear of a run on the banks. Companies like Aeffe fell over 11 percent to 1.20 euros, or $1.34 at today’s exchange rates. Massimo Ferretti, executive chairman of Aeffe, said, “The issue of the Italian banks has been somewhat inflated by the media. I don’t believe this is a huge problem and the main banks are definitely solid.”
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Ferragamo slid almost 4 percent to 19.63, but Michele Norsa, chief executive officer of the Salvatore Ferragamo Group, said “This is not priority issue.”
But even though these companies are remaining calm, traders are not.
In addition to the fear of a run on the banks in Europe, there is also the issue of oil prices and concern that oil giant Chesapeake Energy could be considering a restructure, which poured gas on the fire of fear.
“I don’t believe in the correlation between equities and oil, but it’s very high right now,” said Bliss. He said institutional money was very concerned about more downside risk. “Aside from all the negative influences in the market, there has been a negative feedback loop from corporate America. More companies are announcing layoffs and worry about future growth. If productivity numbers don’t pick up, wage growth won’t pick up,” said Bliss.
Retail and apparel brands are experiencing heavy selling in today’s market. On the tech side, Fitbit is losing another 9.6 percent to sell at $14.21 and so far has lost half its value in less than 60 days. Shopify is dropping by 6 percent to $20.48 and is down 20 percent since the beginning of the year.
Even a market stalwart like Nike saw its stock price fall below its 250-day moving average. The stock dropped over 4 percent to $54.67 and has now lost 10 percent in just two days.
Troubled brands such as Aeropostale gave back over 17 percent of its value to sell at just 17 cents a share. Accessory label Kate Spade fell more than 7 percent to $16.13.
Delta Apparel, which reports its earnings after the market close today, was one of the few clothing brands that was trading in positive territory during the selloff. Its stock was up 2 cents to $12.45. The FactSet consensus is for a loss of 27 cents a share in its first quarter earnings on sales of $89.5 million.