Stocks plunged on Thursday as investors appeared to decide that global headwinds had become overwhelming.
The markets opened to the downside, but then selling picked up on the Nasdaq and crossed over to the Dow Jones Industrial Average and the Standard & Poor’s 500 in midday trading.
Prominent among the retail decliners were the Bon-Ton Stores Inc., which saw its stock plummet 18 percent to $3.2o after reporting a tough quarter with slightly higher losses, and Stage Stores Inc., which plunged 29 percent to $11.95 after unveiling an earnings miss and a plan to close 90 stores.
The Nasdaq closed down 141.56 points to 4,877 as both the biotechnology and technology sectors lost value. The Dow Jones shed 358 points to end at 16,990, having taken a hit from an analyst downgrade of the Walt Disney Co., which sent the stock down more than 5 percent to $100.02. The Dow is now down 3.3 percent for August and 4 percent for 2015.
Selling was triggered after China’s Shanghai Composite closed down 3.4 percent amid rumors that the country’s official Gross Domestic Product target will be dropping to 6.5 percent. Selling in the Chinese market was so fierce that it overcame a 120 billion yuan infusion from the People’s Bank of China.
Greece also reentered the picture as Prime Minister Alexis Tsipras called for a snap election that could take place on September 20, three days after a two-day meeting of the U.S. Federal Reserve Open Market Committee, which could result in an increase to interest rates.
Sara Johnson, IHS Global Insight’s senior research director, wrote in an analysis that global growth may not break out as hoped in 2016. She noted that commodity prices have fallen, world trade in nominal terms has dropped and world export volumes are slowing. Johnson also pointed out that key Asian exporters such as Taiwan and South Korea that had been drivers are now facing stagnant economies.
Other retail earnings reports on Thursday didn’t help either. Cato Corp. and Buckle earnings both disappointed investors. Perry Ellis International Inc. guided higher, so its stock closed up over 7 percent to $25.18. Stein Mart Inc. posted a profit and its stock closed up 3 percent to $11. Sears Holdings Corp. finally showed a quarterly profit with the help of asset sales, but the stock slid 1.5 percent to $22.97.
After the market closed, Gap Inc. reported that its profits fell due to the strong dollar and shipment delays. Gap has not been able to deliver fashion that has attracted female shoppers. The chain said it will close stores and try to get fashions to the store faster as it fights competition from fast-fashion retailers. The stock slipped 1.3 percent to $33.66 in after-market trading.