The Dow and Nasdaq recorded their worst day performances in almost two years on Thursday, as the S&P 500 also loses ground.
On Thursday, the Dow Jones Industrial Average (DJIA) saw its worst day since 2020, as the index tumbled by a staggering 1,063 points or 3.12%. Closing at 32,997.97 due to the steep decline, the Dow was not the only index to severely underperform on the day. The tech-heavy Nasdaq Composite also fell 4.99% to finish at 12,317.69, marking its lowest closing level since November 2020. Following their worst single-day drops in more than a year, both DJIA and NASDAQ have now erased the rally from the prior session.
In addition, the S&P 500 also retraced 3.56% to 4,146.87, which represented its second-worst day of the year. In perspective, more than 90% of S&P 500 stocks declined.
Before the unsavory “worst day” development, the Dow surged 932 points, or 2.81%, as part of a major stock rally on Wednesday. In addition, the Nasdaq also climbed 3.19% during this period, while the S&P gained 2.99% – representing the latter’s most significant gains since 2020.
Some observers see the stunning reversal of fortunes for the indexes twenty-four hours later as mind-boggling. In fact, according to Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research:
“If you go up 3% and then you give up half a percent the next day, that’s pretty normal stuff. … But having the kind of day we had yesterday and then seeing it 100% reversed within half a day is just truly extraordinary.”
Further Look into the Worst Day Performance in Almost Two Years of the NASDAQ, Dow, Others
The NASDAQ Composite hit its lowest in nearly two years due to the general underperformance of large tech and e-commerce stocks. For instance, Facebook-parent Meta Platforms (NASDAQ: FB) and e-commerce giant Amazon (NASDAQ: AMZN) plunged approximately 6.8% and 7.6%, respectively. In addition, perennial computer software producer Microsoft (NASDAQ: MSFT) also gave up around 4.4%. Furthermore, cloud-based software company Salesforce (NYSE: CRM) and consumer electronics giant Apple (NASDAQ: AAPL) tumbled 7.1% and 5.6%, respectively.
Many e-commerce stocks sank on Thursday due to less-than-stellar quarterly earnings reports. Put in perspective, Etsy (NASDAQ: ETSY) plunged 16.8%, while eBay (NASDAQ: EBAY) dropped 11.7% following weak revenue guidance. Furthermore, Canadian e-commerce giant Shopify (NYSE: SHOP) plummeted nearly 15% after missing key estimates in its quarterly report.
On Thursday, stocks leveraged to economic growth also incurred drawdowns. For instance, Caterpillar (NYSE: CAT) declined approximately 3%, with investment banking giant JPMorgan Chase (NYSE: JPM) dipping 2.5%. In addition, leading US home improvement retailer Home Depot (NYSE: HD) also retraced by over 5%.
The sell-off on Thursday also saw outperformers for the year, including Chevron, and Coca-Cola, dip less than 1%.
Treasury Yield
Meanwhile, the 10-year Treasury yield climbed back above 3% on Thursday in the Treasury market, hitting its highest level since 2018. Furthermore, it is worth noting that the Treasury yield moves opposite of the price. As a result, these rising rates can pressure growth-oriented stocks, especially tech stocks, by making long-term earnings less appealing to investors.
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