Stocks fall after Kabul bombing; Fed in wait mode
Declines were widespread; only real estate stocks closed higher
Technology and communication companies led a broad sell-off on Wall Street on Thursday after deadly suicide attacks at the Kabul airport in Afghanistan.
The S&P 500 fell 0.6% a day after capping a fiveday winning streak with an all-time high. The Dow Jones Industrial Average fell 0.5%, while the Nasdaq composite lost 0.6%. Despite the losses, the three major indexes are on track for weekly gains.
Twin suicide bombings struck Thursday outside Kabul’s airport, where large crowds of people trying to flee Afghanistan have massed. At least 60 Afghans and 12 U.S. troops were killed, according to Afghan and U.S. officials. Scores of other people were wounded.
The declines were widespread, with 10 of the 11 sectors in the S&P 500 closing lower. Only real estate stocks closed higher.
Stocks had been moving lower in early trading before the bombings, following pullbacks in markets in Asia and Europe, as investors looked ahead to the Federal Reserve’s two-day conference in Jackson Hole, Wyoming, which began Thursday. The selling accelerated swiftly once news of the attacks broke.
“The unfortunate news that we had around the airport bombing perhaps gave people a reason to sell more aggressively,” said J.J. Kinahan, chief strategist with TD Ameritrade.
The S&P 500 fell 26.19 points to 4,470, while the Dow dropped 192.38 points to 35,213.12. The Nasdaq lost 96.05 points to 14,945.81. The tech-heavy index closed above 15,000 points for the first time a day earlier.
Small company stocks shouldered some of the heaviest selling. The Russell 2000 index slid 25.29 points, or 1.1%, to 2,213.98.
Despite the sell-off in stocks, market indicators that traditionally signal worry on Wall Street were little changed. Treasury yields were mixed, and the yield on the closely watched 10-year Treasury held steady at 1.35%. Meanwhile, the price of gold rose only 0.2%.
The VIX, a measure of nervousness among stock investors, rose 12%, but remained slightly below 20, which signals market risk is low.
Before the attack, most of the market’s attention was on the Fed and on what Fed Chair Jerome Powell will say when he speaks at the central bank’s annual symposium on Friday.
Traders are betting that Fed officials will remain in a “wait and see” mode regarding inflation, since most policymakers believe any inflation earlier this year would be temporary and the rise in COVID-19 cases has worried some economists.
The wave of selling Thursday affected a wide swath of stocks. Microsoft fell 1% and Western Digital slid 4.5%. Dollar Tree led the decline among the S&P 500’s consumer discretionary sector, skidding 12.1%, while clothing retailer Gap dropped 4.1%. Citigroup fell 1% and Facebook gave up 1.1%.
Salesforce.com was one of the biggest gainers, rising 2.7% after the company’s quarterly results easily beat analysts’ expectations. The company also raised its full-year outlook.
Gold for December delivery rose $4.20 to $1,795.20 an ounce. Silver for September delivery fell 22 cents to $23.55 an ounce and September copper fell 2 cents to $4.25 a pound.
The dollar rose to 110.03 Japanese yen from 110.00 yen. The euro fell to $1.1752 from $1.1772.