Major averages suffered sharp percentage declines, and growth stocks got nailed, one day after Fed Chairman Ben Bernanke said the Federal Reserve could start scaling back its monthly bond purchases by year-end.
Stocks never found their footing after a weak open Thursday. The S&P 500 lost 2.5% while the Dow Jones industrial average and Nasdaq gave up 2.3%. Preliminary data showed NYSE and Nasdaq volume coming in much higher than Wednesday.
All three major averages closed below their 50-day moving averages and took out their June 6 intraday lows.
The CBOE Volatility Index, a popular fear gauge, spiked 27%.
In the stock market today, homebuilders underperformed on fear that borrowing costs will continue to rise. The iShares Dow Jones U.S. Home Construction Index Fund (ITB) lost 6% in more than double-average trade. It closed just above its 200-day moving average.
Meanwhile, several growth names faced intense selling pressure. Two leading mortgage servicers took it on the chin. Ocwen Financial (OCN) and Nationstar Mortgage Holdings (NSM) fell 5% and 6%, respectively. Both names closed above their 50-day moving averages.
Ambarella (AMBA) slumped 7% in heavy turnover. While many growth names have slipped below recent buy points, the chip designer is still holding above a base-on-base buy point of 16.10.
Stratasys (SSYS) was a bright spot. Shares bucked the trend, rising 0.8%. Late Wednesday, the company announced an acquisition that wasn't entirely unexpected. It's buying 3D printer firm MakerBot in a deal initially valued at $403 million.
In earnings news, grocery chain Kroger (KR) dived below its 50-day moving average, falling 6% in heavy volume. Earlier today, first-quarter profit came in above expectations, but sales growth disappointed amid mounting competition.
In economic news, weekly jobless claims rose more than expected last week to 354,000, but the Philadelphia Fed's Business Outlook Survey, a gauge of manufacturing activity in the Mid-Atlantic region, smashed estimates with a strong reading of 12.5. It was the highest reading since April 2011. May existing-home sales also came in better than expected.
The U.S. Dollar Index added 0.5% to 81.86, hurting gold and oil prices. At the New York Mercantile Exchange, August gold tumbled $87.80 to $1,286.20 an ounce. July gold shed $2.84 to $95.40 a barrel.
After the close, earnings from business software giant Oracle (ORCL) disappointed. After losing 3% during the regular session, shares fell an additional 4.5% in after-hours trading.
On Friday, CarMax (KMX) and Darden Restaurants (DRI) report before the open.
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