Wall Street posts biggest drop since June on weak results
NEW YORK (Reuters) - U.S. stocks had the biggest one-day percentage drop since late June on Thursday in higher-than-average trading volume after poor results and outlooks from Dow components Wal-Mart and Cisco.
Consumer and technology stocks were among the biggest decliners after Wal-Mart Stores' (WMT.N) shares fell on a surprise decline in quarterly same-store sales and Cisco Systems (CSCO.O) shares dropped one day after the network equipment maker announced it was cutting 4,000 jobs.
"Yes, we are down significantly but this is not a panic sell-off considering how much we have rallied so far this year," said J.J. Kinahan, chief strategist at TD Ameritrade in Chicago. He added that although the CBOE Volatility Index .VIX, a gauge of investor anxiety, spiked for the day, the measure was still below 15.
Adding to the sell-off, data showed consumer prices rose broadly in July and new claims for jobless benefits last week fell near a six-year low, factors which could draw the Federal Reserve closer toward trimming its $85 billion monthly bond-buying program to stimulate economic growth.
The Dow Jones industrial average .DJI was down 225.47 points, or 1.47 percent, at 15,112.19. The Standard & Poor's 500 Index .SPX was down 24.07 points, or 1.43 percent, at 1,661.32. The Nasdaq Composite Index .IXIC was down 63.16 points, or 1.72 percent, at 3,606.12.
The CBOE Volatility index VIX .VIX rose nearly 12 percent to 14.55.
The S&P 500's 1.4 percent drop was the biggest since a 2.5 percent fall on June 20. So far this week, the index was down about 1.8 percent.
Wal-Mart (WMT.N) shares fell 2.6 percent to $74.41 after the world's largest retailer reported a surprise decline in same-store sales and missed revenue estimates for a fifth consecutive quarter. The company also lowered its revenue and profit forecasts for the year.
"The Wal-Mart earnings report is as big a macro indicator as (gross domestic product data)," said Nicholas Colas, chief market strategist at ConvergEx Group in New York.
"It shows that (consumer spending) isn't that strong yet - inflation is rising, wages are not, unemployment is still pretty high and that's not a recipe for a strong retail environment."
The technology sector was the biggest laggard on the S&P 500, heavily weighed down by Cisco, which fell 7.1 percent to $24.51 as brokerages cut price targets on the stock.
Shares of smaller rivals Ciena Corp (CIEN.O) and F5 Networks (FFIV.O) were also down. Ciena fell 5.7 percent to $21.22 while F5 Network slipped 3.5 percent to $89.23.
One of the few bright spots in retail earnings was Kohl's (KSS.N), which reported a rise in quarterly same-store sales, sending its stock up 5.3 percent to $53.51.
Billionaire George Soros added another 2 million shares to his stake in struggling retailer J.C. Penney (JCP.N), regulatory filings showed. The retailer's stock was up 5.5 percent at $13.83.
Volume was roughly 6.4 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, above the average daily closing volume of about 6.3 billion this year.
On the NYSE, decliners beat advancers 2,611 to 452. On the Nasdaq, decliners beat advancers 2,068 to 478.
(Reporting by Angela Moon; Editing by Kenneth Barry)
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