The stock market selling heated up during the day with the Dow Jones Industrial Average closing down 295 points to 16,153.54, a decline of 1.8 percent.
The Nasdaq crumbled another 2 percent, or 103 points, to 4,516 and the S&P 500 gave up 36 points to trade at 1,903 as the wall of worry grew higher.
Investors decided that declining auto sales coupled with a continued meltdown in crude oil prices was enough reason to get out of the market. Tough earnings reports from both Exxon and BP caused investors to fret that even more layoffs in the energy sector will be inevitable. Oil broke below $30 a barrel at one point during the day’s trading. Art Cashin, UBS director of floor operations at the New York Stock Exchange, said a rumor was floating through the traders that a commodity broker may go under.
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Traders were also rattled by a move from the Japanese government to cancel a planned sale of 10-year government bonds. This is the first time than Japan has not sold 10 year government bonds. Japan recently adopted a negative interest rate policy and decided against issuing bonds with a negative yield.
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There were good earnings results from Michael Kors Holdings and Alphabet, formerly known as Google, but they weren’t enough to persuade investors to stay long. JP Morgan strategist Mislav Matejka had said in January that “one should use any strength as an opportunity to reduce equity allocation.” Clearly, that advice is being followed.
Michael Kors managed to hold on to its stock gains all day after reporting a strong fiscal third quarter. Quarterly revenue rose 6.3 percent year-over-year to $1.4 billion. Comp store sales declined 0.9 percent, but had it not been for the negative currency hit, comp store sales would have been up 2 percent. Investors had been expecting the worst from Kors, but were pleasantly surprised. The stock gained 23 percent to trade at $49.74.
United Parcel Service reported its highest ever fourth-quarter earnings, but revenue came in shy of estimates. UPS delivered fourth-quarter revenue of $16.05, which was not quite as much as the analyst estimate of $16.27 billion. UPS said the strong dollar hurt the company as well as those falling oil prices. UPS was unable to hit customers with fuel surcharges. The shipping giant expects 2016 earnings between $5.70 and $5.90 a share, analysts were expecting $5.72 for 2016. UPS stock was up 60 cents to $94.68.