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Stock market close, July 31, 2014: U.S. markets plummeted Thursday in a broad decline, with the Dow Jones shedding 317 points in a broad sell-off. Meanwhile, the S&P 500 fell below its 50-day moving average, erasing all of July's gains as concerns in global markets hammered stocks. The Chicago Board Options Exchange Volatility Index (VIX) jumped more than 26% to an intraday high of 16.98, the highest level since April.
Globally, concerns about defaults and access to capital dominated the day. In addition to Argentina's second bond default in 13 years, concerns in Europe reemerged after Portugal's largest bank Banco Espirito Santosaw its shares fall more than 40% as investors fear the firm will require government aid following huge losses.
Finally, new geopolitical tensions with Russia emerged after the country banned soy and juice exports from Ukraine. Russia's government is also considering a ban on other European fruits and yogurts and U.S. poultry as the nation responds to increasing sanctions against its economy.
Here's the scorecard from today's trading session:
Dow: 16,563.30, -317.06 (-1.88%)
Nasdaq: 4,369.77, -93.13 (-2.09%)
S&P 500: 1,930.67, -39.40 (-2.00%)
Now, here are the top stories from today:
- Tesla Company News: Tesla Motors Inc. (Nasdaq: TSLA) announced that it will partner with Panasonic Corp. (OTCMKTS ADR: PRCFY) to build a massive battery plant in the United States to meet rising demand for its electric vehicles. TSLA also reports earnings after the bell today.
- You're Fired: Shares of Apple Inc. (Nasdaq: AAPL) dropped nearly 2% in afternoon trading as the market sell-off continued. The company announced it would soon slash roughly 40% of the workforce at Beats Electronics, the music-streaming provider and headphones manufacturer that it purchased recently for $3 billion. The reduction of 200 jobs is expected to happen before the deal closes in the coming days.
- Flat Lining: The IPO debut of credit-card company Synchrony Financial (NYSE: SYF) spun off from parent company General Electric Co. (NYSE: GE) floundered this afternoon, as the introduction to the market coincided with the largest market drop in recent months. Shares remained flat for most of the day, after GE raised $2.875 billion by selling 125 million shares, or roughly 15.1% of the spin-off's common stock. The IPO is part of GE's strategy of focusing on industrial businesses like jet-engine manufacturing. Shares of GE fell by more than 1.2% on the day. Here's the full story on SYF stock's first day of trading...
- Merger Mania: In a surprise move to capture share in the U.S. mobile market, French telecom upstart Iliad SA (OTCMKTS: ILIAY) made a bid on America's fourth-largest service provider T-Mobile US Inc. (NYSE: TMUS). The bid, presented to T-Mobile's board last week, is a direct shot at the proposed merger between the U.S. company and Sprint Corp. (NYSE: S), America's third-largest service provider. Though Iliad is valued at just $16 billion, the company is reportedly working to secure capital with banks and other funds to purchase T-Mobile, which has a market cap north of $24 billion. Shares of T-Mobile were up more than 6% on the day. Sprint shares fell by more than 5.5% on the day.
- Pharma Free-Fall: Shares of Valeant Pharmaceuticals International Inc. (NYSE: VRX) slumped more than 7% on news that the company needed to sell off a number of assets to finance a hostile $53 billion acquisition of Botox manufacturer Allergan Inc. (NYSE: AGN). The company said that completing such a deal would reduce its earnings outlook for 2014. Shares of Allergan also fell about 4% on the day. A proposed merger is expected to reach an Allergan shareholder vote sometime this fall.
Now our experts share some of the most important investment moves to make based on today's market trading - for Money Morning Members only:
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.