Stocks fall sharply as banks, tech sector take a beating

A new month began last week, but stocks remained stuck in the same cycle that defined January with high volatility and more down days than good ones.

The Dow Jones Industrial Average dropped 177.92 (over 1 percent) to close at 16,027.05, despite sinking 400 points during the day. It was down as much as 401 points earlier. The Standard & Poor’s 500 slipped five points, or 0.3 per cent, to 1,847.

“The market is trying to find a floor”, said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.

The S&P 500 bounced 33 points from its session low to its high. Banks and other financial companies fell the most, 3 percent. Technology companies, which until recently had been spared due to their low debt burden and rising earnings, joined the rout as investors focus on elevated valuations among the industry’s biggest stocks.

Microsoft’s 3.3 per cent decline weighed the most on the S&P 500 and the Nasdaq.

ROUGH RIDE: Cognizant Technology Solutions was among the biggest decliners in the S&P 500 index.

Shares in emerging market-exposed HSBC dropped to their lowest levels since 2009, while Barclays shares had to be briefly suspended after diving eight per cent in intraday trading.

In response, the company issued a statement around midday saying it “currently has no plans to pursue bankruptcy”. Williams slid $6.27, or 36.6 percent, to $10.85. The Nasdaq is now down almost 15% on the year, compared with “only” 8% for the Dow.

Twitter shed 4.5 per cent to hit a new record low of $US15.03 after reports over the weekend that the company was planning to change how it displays tweets.

“There’s a lot of uncertainty weighing on markets”, said Philippe Gijsels, chief strategist at BNP Paribas Fortis after seeing Friday’s job report. The IT services provider dropped six per cent to $US55 after it forecast its slowest revenue growth in 14 years.

The Nasdaq tumbled 1.8% and got closer to sinking into its first bear market since the one sparked by the financial crisis. The stock lost $4.08 to $66.61.

GOING PRIVATE: Apollo Education Group vaulted 18.5 percent after agreeing to be acquired by a consortium led by investment firm The Vistria Group. The move in gold boosted the ProShares Ultra Gold (NYSEARCA:UGL) recommended to Edge subscribers to a gain of 11.1% for the month so far. Greece’s index sank about 8 percent. In Asia, many markets were closed for the Lunar New Year holidays.

In Asian trade, Japan’s Nikkei Stock Average gained 1.1 per cent as the yen fell against the dollar, while Australia’s S&P ASX 200 ended flat.

Benchmark Brent crude prices fell to their lowest in two weeks and US crude prices dropped below $28 a barrel to their lowest in just under three weeks.