The Dow fell 225.39 points Thursday, one day after the benchmark fell 113 points, its first triple-digit decline since June 28. With Thursday's drop, the Dow hit its first back-to-back triple-digit decline since June 19-20, when it plummeted nearly 560 points over the two days.
June's rout was spurred by comments from the Federal Open Market Committee (FOMC) following its June meeting. At the time, the central bank said it would taper QE this year should the economy and job market continue to improve.
The current swoon, however, stems from way more than the Fed...
Why Did the Dow Fall Today? 5 Reasons
Taking the blame for Thursday's slide...
Before the opening bell, Wal-Mart Stores Inc. (NYSE: WMT) reported earnings and same store sales that missed expectations. The company posted a Q2 profit of $4.07 billion, or $1.24 a share, compared with $4.02 billion, or $1.18 a share a year earlier. Revenue came in at $116.9 billion. Expectations had been for EPS of $1.25 on revenue of $118.09 billion. The world's largest retailer also lowered its earnings and sales projections for the rest of 2013. Shares slumped almost 3% on the gloomy guidance. "The Wal-Mart earnings report is as big a macro indicator as (GDP)," Nicholas Colas, chief market strategist at ConvergEx Group, told Reuters. "It shows that (consumer spending) isn't that strong yet-inflation is rising, wages are not, unemployment is still pretty high and that's not a recipe for a strong retail environment."
Meanwhile, after the closing bell Wednesday, networking leader Cisco Systems Inc. (Nasdaq: CSCO) signaled it was yet again reining in spending. Despite reporting an 18% jump in fiscal fourth quarter profit, the Silicon Valley tech giant said it is cutting 4,000 jobs. CEO John Chambers blamed the decision on a dismal global economic recovery. "What we see is slow, steady improvement, but not the pace we want," Chambers said on a conference call. Investors' first chance to react to the news was Thursday, and they sent the shares down more than 7%.
The yield on the 10-yield Treasury note spiked as high as 2.82% Thursday, a level not seen since July 28, 2011. The upward move has many market participants focusing on the timing of the Fed's tapering and calling for a 3% yield in the very near future. Worries the Fed might start turning off its market-friendly spigot as early as September has certainly spooked equity investors.
Investors also reacted Thursday to an unexpectedly weak reading on manufacturing in the crucial New York region. The Empire State Manufacturing Index slipped to 8.2% in August, down from 9.5% in July. Economists were looking for a 10% rise. The drop suggests that while business conditions for New York manufacturers continued to improve over the past month, it did so at a slower pace than the month before.
Foreign markets also responded wildly to U.S. market woes that started Wednesday, and weighed on the stock market today. Japan's Nikkei 225 index fell 2.1% to 13,752.94, and the Chinese Hang Seng Index ticked lower by 0.01% to 22,539. The Euro Stoxx 50 slid 0.56% to 2,836, the London FTSE 100 plunged 1.3% to 6,502, and the German DAX dropped 0.76% to 8,374.