Stock Market Today: Dow falls nearly 500 points as recession fears reemerge (2024)

Thursday's Top Reads

U.S. stocks saw huge intraday swings on Thursday. According to one metric, it was the market's most volatile day since November 2022.

The S&P 500 was up 0.8% ahead of a key reading on U.S. manufacturing activity. After the report added to the picture of economic weakness that appeared to spook investors, stocks began a relentless decline that saw the large-cap index fall as much as 2% at the day's lows.

This 2.8 percentage-point spread between the session high and session low was the widest since Nov. 30, 2022. On that day, investors bid up stocks after Fed Chair Jerome Powell affirmed that the central bank would slow the pace of its aggressive interest-rate hikes during a speech at the Brookings Institution in Washington, D.C.

The S&P 500 ultimately finished down 75.62 points, or 1.4%, at 5,446.68 as stocks pared their losses during the final hour of trading.

A late-day bounce off of session lows managed to save the Dow from its worst daily drop since early 2023.

But the blue-chip gauge still tallied a nearly 500-point drop on Thursday as markets were buffeted by weak economic data and jitters ahead of two highly anticipated earnings reports due after the bell.

The Dow finished down 494.82 points, or 1.2%, at 40,347.97, according to FactSet data.

Meanwhile, the S&P 500 fell 75.62 points, or 1.4% to 5,446.68 after dropping 2% at its lows earlier in the session. The Nasdaq Composite was off by 405.25 points, or 2.3%, at 17,194.15, after falling 3% earlier.

Gold prices have rallied to fresh record highs three times in less than three weeks, topping $2,500 an ounce at their peak, with the potential to rise even further as the precious metal’s distinction as a “protective asset” continues to take hold.

Gold for December delivery climbed $7.80, or 0.3%, to settle at $2,480.80 an ounce on Comex Thursday. It traded as high as $2,506.60 during the session to touch a new record intraday high.

“There can be no question that geopolitical uncertainties surrounding the conflicts in Europe and the Middle East, coupled with continuing belligerence from China toward Taiwan and an increasingly ugly U.S. presidential election, still encourage investors to seek to increase exposure to protective assets such as gold,” George Milling-Stanley, chief gold strategist at State Street Global Advisors, told MarketWatch Thursday.

If the economic and political environment becomes “more favorable for gold — for example, with growing weakness in the dollar because of rate cuts — a trading range for the metal of between $2,500 and $2,700 could be possible,” said Milling-Stanley.

Rising concerns about the strength of the U.S. economy on Thursday sent the policy-sensitive 2-year Treasury yield down by the most in a single session all year.

The 2-year yield dropped 17.4 basis points to 4.163%, the lowest closing level since Jan. 12. Thursday's drop was the biggest for a single session since Dec. 13 of last year.

José Torres, senior economist at Interactive Brokers, captured Thursday's mood across markets in his latest commentary.

"Markets are approaching panic mode as many economic factors converge, supporting a drift away from risk assets. Investors are dropping stocks like rocks and opting for Treasurys and Swiss francs," Torres said.

Defensive assets and currencies like Treasurys and the Swiss franc were rallying on Thursday as the Dow headed for its worst day of 2024.

Strong earnings from Apple Inc. and Amazon.com Inc. could provide stocks with some short-term relief in overnight trading, with gains potentially extending into Friday if the July jobs report is well-received, Torres said. But expect more losses to follow as the third quarter is "all about the bears taking back some of the gains from the bulls."

The U.S. stock market’s fear gauge was surging Thursday afternoon, as the S&P 500 traded sharply lower.

The Cboe Volatility index was up more than 18% in afternoon trading at 19.35, according to FactSet data, at last check. Market anxiety was climbing as stock-market investors assessed fresh economic data including a jump in jobless claims.

Stocks were broadly selling off Thursday afternoon, with the S&P 500 dropping 1.9%, the technology-heavy Nasdaq Composite slumping 2.9% and the Dow Jones Industrial Average falling 1.7%, according to FactSet data, at last check.

Despite the stock market's sharp selloff, the NYSE and Nasdaq Arms Indexes aren't showing signs of panic-selling behavior.

The Arms, which is a volume-weighted breadth measure, usually rises above 1.000 as the market falls, as volume in declining stocks increases relative to volume in advancing stocks. Many market watchers tend to view a rise above 2.000 as an indication of panic-like selling.

The S&P 500 was down 1.8% in recent trading and the Nasdaq Composite was shedding 2.8%.

The NYSE Arms was up to 1.607, as the number of declining stocks outpaced advancers by a 2.39-to-1 margin, and down volume beat up volume by a 3.85-to-1 margin.

But the Nasdaq Arms was down to 0.857, amid a decliner-versus-advancer ratio of 3.81-to-1 1but a down volume-versus-up volume ratio of less than that, at 3.26-to-1.

The last time the NYSE Arms closed above 2.000 was April 12 at 2.25 when the S&P 500 fell 1.5%, while the last time the Nasdaq Arms closed above 2.000 was Aug. 24, 2023 at 2.01, when the Nasdaq Composite dropped 1.9%.

The Dow is on track for its worst day of 2024 with a little over an hour left of trading on Thursday.

These companies were adding the most to its decline.

Plenty of other stocks contributed to the average's drop. Shortly before 3 p.m. Eastern Time, only eight of the blue-chip gauge's 30 member stocks were trading in the green. Other notable decliners included Chevron Corp., American Express Co. and JPMorgan Chase & Co.

The selloff in semiconductor names Thursday could mean the worst daily decline for Micron shares since the start of the pandemic.

Micron's stock was down 8.7% in afternoon trading, tracking toward its largest one-day percentage drop since it fell 19.8% on March 16, 2020, according to Dow Jones Market Data.

Western Digital, which also plays into the memory market, reported earnings late Wednesday that indicated weakness in some consumer areas. "Weaker trends in consumer and channel markets are impacting bit demand, which we think is the reason behind the softer [fiscal first-quarter] outlook," Raymond James analyst Srini Pajjuri wrote.

Shares of Western Digital were off 12.9% toward the end of Thursday's session.

Analysts still see reason to be upbeat about Arm’s potential, despite a miss on royalty revenue that’s sending the chip designer’s stock down about 17% in Thursday trading.

“Assuming Arm will be part of whoever comes out on top of AI seems like less of a risk than almost anything else, other than maybe Nvidia,” Guggenheim analyst John DiFucci wrote.

He noted that the company’s licensing business saw “robust” growth, and licenses now tend to lead to royalties down the line. “We think it’s safe to say that a customer wouldn’t purchase licenses without a plan to convert them into products for sale,” DiFucci wrote.

BofA’s Vivek Arya took a similar long-term view, saying that if you block out the “quarterly noise,” Arm’s “big picture [is] on track.”

He wrote that “the surge in licensing revenues, growing double digits annually is a strong leading indicator of Arm tech adoption and eventual conversion to recurring royalty revenues.”