U.S. STOCKS SUFFER WORST DROP IN 3 MONTHS
US stocks suffered their biggest one-day percentage drop in three months on Wednesday, adding to losses after the latest Fed statement as major indexes were also pressured by a slump in Boeing and a selling of long positions by hedge funds, Chuck Mikolajczak and Stephen Culp reported for Reuters early on January 28, 2021.
Shares of videogame retailer GameStop Corp and movie theater operator AMC Entertainment Holdings Inc each more than doubled on Wednesday, continuing a torrid run higher over the past week, as amateur investors again piled into the stocks, forcing short-sellers such as Citron and Melvin to abandon their losing bets.
After briefly paring losses, declines accelerated in the wake of the policy statement from the Federal Reserve. The central bank kept overnight interest rate near zero and made no change to its monthly bond purchases, as was widely expected, and pledged to keep that support intact until a full economic rebound is in place.
The Dow Jones Industrial Average fell 633.87 points, or 2.05%, to 30,303.17, the S&P 500 lost 98.85 points, or 2.57%, to 3,750.77 and the Nasdaq Composite dropped 355.47 points, or 2.61%, to 13,270.60. Each of the three major US indexes saw their biggest daily percentage decline since Oct. 28.
The declines also pushed the benchmark S&P index into negative territory for the year. Boeing Co fell 3.97% and was among the top drags on the Dow after the plane maker took a hefty $6.5 billion charge on its all-new 777X jetliner due to the COVID-19 pandemic and the aftermath of a two-year safety crisis over its 737 MAX.
Microsoft Corp. initially rose after its results as the software maker continues to benefit from remote working and learning trends globally but erased most of those gains as part of the broader market slump and ended up 0.25%.
Facebook shares edged up 0.68% while Tesla fell 2.10% after the close as the social media giant and electric automaker reported results. Apple shares also dipped in extended trade after its results.
The CBOE Market Volatility index, often used as a gauge for investor anxiety, closed at a high of 37.21, its highest since Oct 30. Walgreens Boots Alliance Inc was a bright spot on the day, as shares rose 4.05% after the drugstore chain named the outgoing chief operating officer of Starbucks, Roz Brewer, as its CEO.
Volume on U.S. exchanges was 23.42 billion shares, well above the 14.31 billion average for the full session over the last 20 trading days.
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