Stock Market Plunges To New Lows As This Leading Sector Sells Off

It didn’t take long for the bears to come off their one-day break. After surging Wednesday, the stock market indexes went right back to heavy losses, as the leading energy sector saw some of the worst action.

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Indexes gapped down at the open and made new lows for the year. At 10:08 a.m. ET, the Nasdaq composite was down 3.6%, the S&P 500 3% and the Dow Jones Industrial Average 2.4%.

Stock Market Decliners Far Outweigh Gainers

Volume rose on the NYSE and Nasdaq compared with the same time on Wednesday. Decliners led advancers by an 11-to-2 ratio on the Nasdaq and by abut 15-to-1 on the NYSE.

The stock market Wednesday jumped after the Federal Reserve, as expected, raised the benchmark interest rate by three-quarters of a point. It was the largest increase since 1994, and showed the Fed is not holding back in trying to put down 40-year high inflation.

The central bank continues to also cut its balance sheet, which is another form of tightening. Wednesday’s move raised the overnight interbank lending rate to a target range of 1.5%-1.75%. Policymakers now expect it to climb to 3.8% this year.

Earlier today, the Bank of England raised its key interest rate by a quarter percentage point for the fifth straight time. The bank said larger increases may be needed.

The London FTSE 100 index plunged 2.7% in afternoon trading. The Paris CAC 40 lost 2.2%, and the German DAX index was down 2.8%.

In Asia, the Tokyo Nikkei fell 0.4%, the Shanghai Composite fell 0.6% and the Hong Kong Hang Seng lost 2.2%.

Jobless claims eased to 229,000 from a revised 232,000 the previous week. The Econoday survey of economists had expected 220,000 claims. The four-week moving average edged up to 218,500.

Housing starts fell 14% in May to 1.549 million from 1.81 million the previous month. Building permits fell to 1.695 million from 1.823 million in April, the Commerce Department said. Both numbers were lower than economists’ forecasts.

The yield on the 10-year Treasury note rose 3 basis points to 3.42%.

Growth Stocks Also Get Pounded

The Innovator IBD 50 ETF (FFTY) fell 2.5%. About 22 stocks in the fund fell more than 3%, including many energy companies.

Devon Energy (DVN), TotalEnergies (TTE), Callon Petroleum (CPE) and Marathon Oil (MRO) gapped below their 50-day moving averages in heavy stock market trading.

Outside the IBD 50, many other energy leaders and a number of chemicals stocks were down in heavy volume. Some pierced their 50-day lines. PetroChina (PTR) plunged 7.5% and slid below the 50-day moving average in heavy volume.

Building products companies Boise Cascade (BCC) and Beacon Roofing Supply (BECN) gapped below their 200-day moving averages, three days after both broke below the 50-day line.

Energy and consumer discretionary sectors were this morning’s stock market weakest sectors. The price of U.S. crude oil fell nearly 2% to $113.12 a barrel.

Apple (AAPL) fell 3% to a one-year low. Its 50-day line is now below the 200-day average.

Jabil (JBL) erased premarket gains and was down 4% in heavy trading. The contract manufacturing company this morning beat expectations for its May-ended quarter. Jabil, citing its strong electronics business, raised guidance for the current quarter and full fiscal year. The stock is still in the bottom rungs of a base with a 72.21 buy point.

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