Wall Street tumbles to sharply lower close as abrupt sell-off snaps rally
By Stephen Culp
NEW YORK (Reuters) — U.S. stocks closed lower on Wednesday after an abrupt mid-afternoon nosedive ended Wall Street's impressive rally, which had been driven by falling interest rates and the Federal Reserve's dovish turn.
All three major U.S. stock indexes veered lower late in the session to end 1.3% to 1.5% below Tuesday's close.
Stocks were «near all time highs, they hit resistance,» said Jay Hatfield, portfolio manager at InfraCap in New York, noting the downturn was «surprisingly vociferous, things went from hot to cold real fast.»
«It’s surprising how aggressive the sell-off is, but it makes sense considering how far we’ve come,» Hatfield added.
FedEx (NYSE:FDX) shares tumbled 12.1% after the package delivery company missed quarterly profit estimates and cut its full-year revenue forecast as it battles United Parcel Service (NYSE:UPS) in what is shaping up to be a weak holiday season. UPS dropped 2.9%.
Some traders said the market selloff could have been aggravated by large purchases of near-term put options on the S&P 500, including put contracts that would guard against a drop below the 4,755 level on the index by the end of the session.
Put options convey the right to sell shares at a fixed price in the future and at times options-linked hedging activity can heighten volatility.
In extended trade, Micron Technology (NASDAQ:MU) jumped 4.4% after the memory chipmaker forecast quarterly revenue above estimates.
During the session, the S&P 500 got within 0.5% of its all-time closing high. Reaching a new closing high would have confirmed the benchmark index had been in a bull market since closing at the bear market floor in October 2022.
The index is now more than 2.0% below its record closing
Read more on investing.com
