MARKET SNAPSHOT: U.S. Stocks Tumble To 22-month Low As Energy, Financials Drop

By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch

FANG stocks get hit; Dow tumbles over 300 points

U.S. stocks tumbled Monday morning to their lowest level in 22 months as a fresh drop in oil prices amid continuing fears of economic slowdown pushed investors to the perceived safety of government bonds and gold.

The S&P 500 tumbled 36 points, or 1.9%, to 1,844, its lowest level since April 2014. The Dow Jones Industrial Average skidded 312 points, or 1.9%, at 15,891, also a 20-month low.

As the main stock indexes broke below their Jan. 20 lows, success or failure in testing those support levels "could indicate if we are really heading into a big bear market or nearing the end of a big correction within a bull market," said Colin Cieszynski, chief market strategist at CMC Markets, in emailed comments.

While stocks slumped, demand for so-called haven assets surged, pushing gold prices to a nearly four-month high, (http://www.marketwatch.com/story/gold-jumps-to-near-4-month-high-as-investors-turn-to-safety-2016-02-08) and Treasury yields , which move inversely to prices, to a 12-month low.

The Nasdaq Composite logged the heaviest losses, down 108 points, or 2.5%, to 4,255, as the theme of a collapse in the so-called FANG stocks continued for a second straight session.

Those stocks are Facebook Inc. (FB), Amazon.com Inc. (AMZN) Netflix Inc. (NFLX) and Google parent Alphabet Inc. (GOOGL)

Facebook shares fell 2.3% Monday morning, while Twitter Inc. (TWTR) tumbled 4.8% to an all-time low. Alphabet was down 1.2% and Netflix inched higher by 0.6%.

"Is the market throwing out the baby with the bath water?" said James Meyer, chief investment officer at Tower Bridge Advisors, referring the "rapid fall in prices for the high flying tech and biotech names that have been leading the market for the past 12 months."

"The former leaders of the previous bull cycle are the ones that get taken to the woodshed in the last phase of the downturn," Meyer said.

As oil prices sank again (http://www.marketwatch.com/story/oil-pops-above-31-a-barrel-as-traders-keep-close-watch-on-the-dollar-2016-02-08), amid continuing fears about the global oversupply of crude, the energy sector was the worst performer on the S&P 500, down 2.7% on the day. Energy names like Chesapeake Energy Corp. (CHK) and Williams Companies(WMB) leading the decliners, down 33% and 23.5% respectively.

Financials were the second-worst performing sector on the S&P 500, down 2.5%, as ultra-low interest rates and widening credit spreads have fueled concerns about banks' balance sheets. Financial giants like Goldman Sachs Group (GS) and Visa Inc. (V) were leading the Dow industrials losses.

Also read:Why a selloff in European banks is ominous (http://www.marketwatch.com/story/why-a-selloff-in-european-banks-is-ominous-2016-02-07)

Monday's losses came on the heels of the biggest weekly drop in a month for U.S. equities (http://www.marketwatch.com/story/wall-street-gets-the-jitters-ahead-of-key-jobs-data-2016-02-05). The Nasdaq Composite fell 3.3% on Friday and logged a 5.4% weekly drop, its biggest in a month,

A mixed U.S. jobs report and weak oil prices played a role in last week's dives, which included a 1.6% weekly drop for the Dow industrials and a 3.1% slide for the S&P 500 . Oil prices lost more than 8% last week (http://www.marketwatch.com/story/crude-prices-steady-as-a-weak-dollar-lends-support-2016-02-05).

"While [Friday's jobs report] may previously have supported markets as delayed tightening means monetary conditions remain accommodative for longer, global growth fears appear to have surpassed rate hikes as being the biggest threat for investors," said Craig Erlam, senior market analyst at Oanda.

Investors will be looking ahead to comments from Federal Reserve Chairwoman Janet Yellen on Wednesday and Thursday, when she testifies to Congress about the economy and monetary policy. Last week's jobs data prompted questions about the Fed's future interest-rate policy, as Friday's data showed slower jobs growth, but decent wage inflation.

There is no data scheduled for Monday, nor any Fed speeches. The week will end with retail sales data.

Read:Why consumers may keep economy from sinking (http://www.marketwatch.com/story/why-consumers-may-keep-economy-from-sinking-2016-02-07)

Stocks to watch

Hasbro Inc. (HAS) gained 1.5% after the company beat earnings and revenue estimates, boosted by sales of Star Wars toys.

BioCryst Pharmaceuticals Inc. (BCRX) shares slumped 67% after the pharmaceutical company reported failure in a study for a new drug to treat a rare genetic condition (http://www.marketwatch.com/story/biocryst-fails-in-study-for-new-drug-to-treat-rare-genetic-condition-2016-02-08).

Shares of LeapFrog Enterprises Inc. (LF) fell modestly after VTech Holdings Inc. (0303.HK) said it would buy the struggling educational toy maker for $72 million in cash (http://www.marketwatch.com/story/struggling-leapfrog-bought-by-vtech-for-72-million-2016-02-07).

Apollo Education Group Inc. (APOL) shares jumped 24%after the company said it would be taken private in a $1.1 billion deal (http://www.marketwatch.com/story/apollo-education-group-to-be-taken-private-2016-02-08).

Read:Disney, Coca-Cola headline consumer-heavy earnings week (http://www.marketwatch.com/story/disney-coca-cola-headline-consumer-heavy-earnings-week-2016-02-07)

Other markets

European markets also tumbled, with the Stoxx Europe 600 index dropping to a 15-month low (http://www.marketwatch.com/story/european-stocks-drop-to-15-month-low-2016-02-08). The Nikkei 225 index (http://www.marketwatch.com/story/japan-australia-stocks-start-the-day-down-on-fed-uncertainty-2016-02-07) closed up 1%, boosted by upbeat earnings, while many other markets in Asia were closed for the Lunar New Year holiday. See: When are Chinese markets closed for holiday? (http://www.marketwatch.com/story/when-is-chinas-stock-market-closed-for-lunar-new-year-2016-02-05)

Data over the weekend showed China's foreign currency reserves fell by $99.469 billion in January, hitting the lowest level in more than three years (http://www.marketwatch.com/story/chinas-foreign-currency-reserves-drop-9947-bln-2016-02-06).

The dollar (http://www.marketwatch.com/story/dollar-rises-as-tokyo-stocks-recover-2016-02-08) pulled back against its major rivals.

(END) Dow Jones Newswires

February 08, 2016 10:47 ET (15:47 GMT)

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