Troubled by a decline in commodity prices and a lower global economic growth outlook, active investors stood on the sidelines today, which lowered trading volume and created volatility that reverberated across all sectors.
The concern is that a slowed global economy – lead by China and emerging markets – would have a heavy impact on corporate earnings over the next few quarters.
As a result, the Dow Jones Industrial Average fell 179 points, or 1.1 percent, to 16,330 while the S&P 500 lost 1.2 percent to 1,942. The Nasdaq dropped 1.5 percent to 4,756, and the S&P 500 Retailing Industry Group index lost 1.2 percent to 1,194.
The CBOE Volatility Index swelled 30.1 percent to a reading of 22.81. In the retail, fashion apparel and beauty segments, stocks suffered declines of between 0.5 and 2 percent. Some of the notable decliners included Bon-Ton Stores Inc., which fell 8.6 percent to close at $4.06; Avon Products Inc., which dropped 2.5 percent to finish at $3.57, and Vince Holding Corp., which declined 4.2 percent to $4.09.
In European trading, all the major indices suffered steep falls earlier in the day. The London FTSE fell 2.8 percent to 5,936 while Frankfurt’s DAX lost 3.8 percent to 9,571. The CAC 40 in Paris fell 3.4 percent to close at 4,429 and the FTSE MIB in Milan dropped 3.3 percent to 21,032.
Earlier in the day, the Nikkei 225 in Japan lost 2 percent to close at 18,070. Hong Kong’s Hang Seng index, however, gained 0.2 percent to finish at 21,797. And China’s downtrodden Shanghai index rose 0.9 percent to close at 3,186.
On the U.S. retail front, weekly sales were sluggish, but monthly results may see some uptick. The Retail Economist-Goldman Sachs Weekly Chain Store Sales Index rose 0.2 percent on a seasonally adjusted basis compared to the prior week for the period ended September 19. Year-over-year sales showed a 1.4 percent gain.
Michael P. Niemira, chief economist of The Retail Economist LLC, said in September, “There appears to be a pocket of weakness present in the consumer landscape for retailers. However, the year-over-year mismatch of Labor Day still should modestly benefit sales comparisons in September.”