Stocks end sharply lower after rally evaporates
NEW YORK -- U.S. stocks fell in afternoon trading Wednesday as a rally faded. The declines were led by energy companies as the price of oil dropped.
The market's reversal appeared to have been triggered by a government report that showed the number of available jobs jumped sharply in July to the highest level in 15 years. That's adding to evidence that hiring remains strong and may prompt Federal Reserve policymakers to raise interest rates later this month.
The losses gathered steam after a jump in Apple (AAPL) faded during an event by the technology company displaying new products. Apple shares closed nearly 2 percent lower.
Stocks had started the day higher on optimism that policymakers in Asia will do more to help boost growth in the region. Japan's stock market logged its biggest gain in almost seven years after comments from the country's prime minister raised expectations of more measures to shore up economic growth.
The Dow Jones industrial average (DJI) fell 239 points, or 1.5 percent, to 16,254. The Standard & Poor's 500 index (SPX) dropped 27 points, or 1.4 percent, to 1,942. The Nasdaq composite (COMP) fell 55 points, or 1.2 percent, to 4,757.
In a classic good-news-is-bad-news moment for the markets, an early rally fizzled after the U.S. government reported that the number of available jobs jumped sharply in July to the highest level in 15 years. That could affect deliberations at a Federal Reserve meeting next week.
The Fed has held its benchmark interest rates close to zero for almost eight years. The backdrop of low interest rates has been good for stocks, underpinning a 6 ½ year-long bull market. That dynamic may change if signs of an improving economy push policymakers toward lifting rates for the first time in close to a decade.
"More job openings suggest the labor market is getting stronger and that the Fed shouldn't keep interest rates near zero," Kate Warne, investment strategist at Edward Jones, said.
The Nikkei 225 soared after comments from Prime Minister Shinzo Abe that raised expectations of more measures to shore up economic growth under his "Abenomics" stimulus program. The Nikkei rose 7.7 percent, its biggest one-day rise since October 2008.
China's No. 2 leader tried to ease concerns about its economic slowdown, saying the nation's growth is in the "proper range" and Beijing has no plans to allow its currency to decline further following a surprise devaluation on Aug. 11. Premier Li Keqiang also said Beijing will stick to plans for market-opening reforms despite recent "fluctuations" in economic performance.
Barnes & Noble sank after the troubled bookseller reported a wider first-quarter loss as sales of its Nook e-reader and digital books fell sharply. Its college bookstore business, which was the only unit to post an increase in sales in the quarter, was spun off last month.