By Scott Stoddard, Investor’s Business Daily
Wall Street’s sell-off accelerated into the close Wednesday as Israel launched an offensive against Palestinian militants, anti-austerity protests hit Europe and President Obama warned that hiking taxes on the middle class could spark a recession.
The Dow Jones industrial average slumped 1.5%, the S&P 500 dropped 1.4% and the Nasdaq sank 1.3%. All three indexes touched a fresh low for the current market correction and fell further below their 200-day moving averages. Volume rose 13% on the NYSE and 16% on the Nasdaq compared with Tuesday, according to preliminary data.
AMC Networks (AMCX) sank 3% in strong volume but remains 11% above its 44.18 cup-with-handle buy point. The stock has fallen for four straight sessions since hitting a record high Nov. 8 after the company reported Q3 profit fell a less-than-expected 9% from a year ago. Three of those losses came in strong volume.
Generac (GNRC), a maker of portable generators for homes and businesses, fell almost 4% in volume that was modestly above average. The stock gapped up 20% in monster volume on Oct. 31, hitting a new high after Superstorm Sandy left millions without power along the East Coast. But it’s since pulled back and now sits 13% below the peak.
On the upside, NetApp (NTAP), a maker of network storage devices, climbed 3% in more than double its average daily volume. The stock jumped in post-session trading after the company said profit for the latest quarter fell a less-than-expected 19%, improving on the prior quarter’s 24% decline. Sales edged up 2% after a 1% drop the prior quarter.
Still, NetApp remains well below its sinking 200-day and 50-day lines.
Elsewhere, PetSmart (PETM) fell 1% during the regular session, sinking further below its 50-day line in below-average trade. But the stock jumped after hours on a better-than-expected 31% gain in Q3 profit. The stock has been working on a flat base.
President Obama said raising taxes on the middle class could hurt holiday retail sales and affect corporate planning and hiring plans.
“We could go back into recession,” he said, if lawmakers fail to soften the brunt of tax hikes and spending cuts scheduled to take effect Jan. 1.
Also, Fed minutes released Wednesday afternoon indicated that some officials favor additional quantitative easing next year. The minutes also suggested the central bank may provide better guidance on when it might raise interest rates.
Meanwhile, Israel launched air strikes in the Palestinian territory of Gaza, killing the military leader of the Hamas militant group. The assault was in retaliation for Hamas rocket strikes against Israel.
In Europe, planned anti-austerity strikes went ahead across southern Europe, with thousands of workers taking to the streets in Spain, Portugal, Italy and Greece.
Wal-Mart (WMT), Target (TGT), Ross Stores (ROST), Gap (GAP) and Dollar Tree (DLTR) are among a large group of retailers reporting quarterly earnings Thursday. Internet stock Aruba Networks (ARUN), software developer Intuit (INTU) and aerospace stock TransDigm (TDG) also report.
A host of economic data is also due Thursday, including weekly jobless claims, the consumer price index for October and two key regional manufacturing indexes for the greater New York and mid-Atlantic regions.