U.S. stocks fall for 5th day as biotech, commodity shares slide

NEW YORK – U.S. stocks fell Monday, with equities down for a fifth consecutive session, as raw-material and energy shares retreated amid more signs of slowing in China, while biotechnology companies extended last week’s selloff.

The Nasdaq Biotechnology Index sank 3.8 percent after its worst week since 2011. Freeport-McMoRan Inc. tumbled 8.8 percent as copper dropped to the lowest in a month amid evidence of industrial weakness in China. Schlumberger Ltd. and Marathon Oil Corp. lost at least 3.9 percent as oil prices slid. Alcoa Inc. rallied 4.7 percent after saying it will split into two publicly traded companies.

The Standard & Poor’s 500 Index fell 1.7 percent to 1,899.09 at 11:40 a.m. in New York, its lowest level in a month. The Dow Jones Industrial Average lost 216.47 points, or 1.3 percent, to 16,098.20. The Nasdaq Composite Index dropped 2 percent.

“We are in a chaotic market, lots of volatility but not making much progress in either direction,” said James Gaul, a portfolio manager at Boston Advisors LLC, which oversees $2.8 billion. “Earnings are going to be really important this quarter considering the macro backdrop and general global fears as well as the concerns about the Fed potentially raising interest rates as early as next month.”

- Advertisement -

Equity markets have been turbulent in recent weeks amid confusion over the Federal Reserve’s tightening policy and concern over a slowdown in Asia. Data today showed profits of Chinese industrial companies fell the most since the country’s government began compiling data in 2011. Biotechnology shares tumbled on Friday, offsetting gains fueled by Fed Chair Janet Yellen’s reassurances that turbulence in emerging markets won’t harm U.S. growth.

Federal Reserve Bank of New York President William C. Dudley said Monday the central bank will “probably” raise interest rates later this year despite uncertainties over global growth. “I think that the economy is doing pretty well,” Dudley said at an event in New York. He said he expected growth in the second half will be “a little bit weaker” than in the first half.

A report Monday showed household spending climbed more than forecast in August and incomes also rose as the biggest part of the U.S. economy continued to power past a global slowdown. Separate data showed contract signings to purchase previously owned U.S. homes unexpectedly declined in August for just the second time this year, signaling residential real estate might have difficulty building on recent momentum.

Biotechs battered

“Supposedly Yellen had clarified everything on Thursday, and yet the market still went down,” said Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York. “It shows me that there are issues other than the Fed causing this decline. Biotechs have rolled over. The market narrowed through the summer, and we still had a couple of groups that were still acting pretty well, but they rolled over. We’re losing what little leadership we had left.”

The Nasdaq Biotech Index slid into a bear market on Friday amid its worst weekly decline in four years. The rout was sparked by a tweet last Monday from Democratic presidential hopeful Hillary Clinton suggesting there may be “price gouging” in the market for prescription drugs.

The S&P 500 has fallen 8 percent in the third quarter, poised for its worst autumn since 2011, and on track Monday for its lowest close in a month. The benchmark is 11 percent below its all-time high set in May. The Chicago Board Options Exchange Volatility Index has closed above 20 for the past 25 sessions, the longest streak since 2012. The measure of market turbulence known as the VIX climbed 11 percent Monday to 26.24.

Stocks fell after the Fed’s decision to hold off raising rates on Sept. 17 raised questions about the impact of a global growth slowdown on the U.S. Despite Yellen signaling last week that the economy is sturdy enough to handle higher raise rates in 2015, traders are pricing in a 43 percent probability of the event in December and a 50 percent chance in January.

All of the S&P 500’s 10 main industries declined Monday, with materials, health care and energy losing more than 2.3 percent. Eight groups decreased at least 1 percent.

Raw-materials companies fell for the seventh time in eight sessions, losing 9 percent during the span and declining to the lowest in more than two years. Freeport-McMoRan has slumped 24 percent since the Fed said it was considering spillover risks to the U.S. economy from turmoil in global markets. Dow Chemical and DuPont Co. dropped more than 1.9 percent on Monday.

Mylan NV, Regeneron Pharmaceuticals Inc. and Gilead Sciences Inc. lost at least 3.4 percent to pace the slide in health care. The group is down 9.5 percent amid a seven-day losing streak, the longest since August 2011. Pfizer Inc. and Merck & Co. retreated more than 1.6 percent.

No posts to display