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Stock Market News for October 14, 2014

Declines in energy and airline stocks triggered a late-hour selloff and dragged benchmarks down on Monday. Energy stocks took a beating due to drop in oil prices, while airline stocks slipped after a nurse in Dallas was infected with Ebola virus. Investors also remained concerned about slowdown in the global economy. The S&P 500 closed below a key technical level.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article

The Dow Jones Industrial Average (DJI.V) declined almost 1.4%, or 223.03 points, to close at 16,321.07. The Standard & Poor 500 (S&P 500) decreased almost 1.7% to close at 1,874.74. The tech-laden Nasdaq Composite Index closed at 4,213.66; declining 1.5%. The fear-gauge CBOE Volatility Index (:VIX) jumped 16.1% to settle at 24.64. A total of 583 million shares were traded on NYSE on Monday. Decliners outpaced advancing stocks on the NYSE. For 65% stocks that declined, 32% advanced.

Benchmarks ended a volatile trading session lower due to intense selling pressure in the last hour. The S&P 500 closed below its 200-day moving average of 1,905 for the first time since Nov 16, 2012. The index also registered its worst three-day loss since Nov 2011. In the last three-sessions the index has dropped 4.8%. Last week, the index had posted its biggest weekly decline since May 2012.

The Dow dropped over 1% on Monday after it entered the negative zone for the year on Friday. In the last three days the blue-chip index has dropped 4%, or 673.15 points. This is Dow’s biggest three-day plunge since 2011.

Benchmarks suffered losses due to declines in energy and airline stocks. Decline in oil prices dragged down energy stocks on Monday. The price of Brent crude oil dropped 1.5% to $88.89 per barrel yesterday, the lowest closing price since Nov 2010. The WTI crude oil price also dropped 0.1% to $85.74 per barrel.

The Energy Select Sector SPDR (XLE) was the biggest loser among the S&P 500 sectors. The sector dropped 3.1%. The sector plunged 7.6% in the last three trading session, registering its steepest three-day drop since Sep 2011. Key energy stocks including Halliburton Company (HAL), Chesapeake Energy Corporation (CHK), EOG Resources, Inc. (EOG), Helmerich & Payne, Inc. (HP) and Chevron Corporation (CVX) declined 7.4%, 6%, 6.8%, 5.9% and 1.6%, respectively.

Airline stocks were hit hard by Ebola concerns as it might hamper demand for travel-related services. A nurse was affected with Ebola in the US while treating a Liberian man affected with the deadly virus. Director of CDC, Thomas Frieden, expressed deep concern and said an unknown breach in protocol was responsible for the nurse being infected.

Shares of U.S. airline companies such as Delta Air Lines Inc. (DAL), United Continental Holdings, Inc. (UAL), American Airlines Group Inc. (AAL), The Boeing Company (BA) and Southwest Airlines Co. (LUV) decreased 6.1%, 7.3%, 7.2%, 0.9% and 5.5%, respectively.

The Materials Select Sector SPDR (XLB) declined 2.6%, the second biggest loser among the S&P 500 sectors. Key stocks from the sector such as E. I. du Pont de Nemours and Company (DD), The Dow Chemical Company (DOW), Praxair Inc. (PX) and Ecolab Inc. (ECL) decreased 1.3%, 5.6%, 1.6% and 1.6%, respectively.

All 10 sectors of the S&P 500 ended in the red. Among the sectors, industrials, telecommunications, consumer discretionary and materials ended in the red zone for the year.

Meanwhile, investors were concerned about slowing economic growth in Europe and China. The International Monetary Fund (:IMF) expressed concern over stagnant growth in the Eurozone in its latest global economic outlook released last week. According to the IMF, the Eurozone’s probability of re-entering a recession in the next six months has nearly doubled to 38% since April. IMF expects the Eurozone’s GDP to grow a meager 0.8% in 2014. Separately, a report released by HSBC/Markit showed that China’s services Purchasing Managers' Index (PMI.V) declined from 54.1 in August to 53.5 in September.

Investors also remained focused on earnings results. Major components of the S&P 500 such as JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Company (WFC), BlackRock, Inc. (BLK) and Google Inc. (GOOGL) are scheduled to report quarterly results this week.


Read the analyst report on HAL

Read the analyst report on CHK

Read the analyst report on EOG

Read the analyst report on HP

Read the analyst report on CVX

Read the analyst report on DAL

Read the analyst report on UAL

Read the analyst report on AAL

Read the analyst report on BA

Read the analyst report on LUV

Read the analyst report on JPM

Read the analyst report on C

Read the analyst report on WFC

Read the analyst report on BLK

Read the analyst report on GOOGL

Read the analyst report on DD

Read the analyst report on DOW


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