NEW YORK – For investors, there were few havens Thursday.
The stock market had its worst one-day drop since February, driven down by a confluence of worries, from weak company earnings to the looming end of stimulus from the Federal Reserve.
But it wasn’t just stocks that felt the impact: Oil fell to its lowest level since March, gold dropped, and even Treasury notes edged lower.
Stocks started the day lower after a dose of bad earnings news, and the losses accelerated throughout the day.
Whole Foods Market and Exxon Mobil were among companies that fell after reporting results or forecasts that disappointed investors.
The stock market has been on a bull run for more than five years, with the most recent leg of that surge pushing the Standard & Poor’s 500 index to an all-time high a week ago. Investors are now getting concerned that stocks may have climbed too far and reflect too much optimism on the outlook for growth.
“We’ve been on a strong run,” said Jerry Braakman, chief investment officer at First American Trust. “There’s just more concern that stock valuations are rich compared to historical norms.”
The S&P 500 dropped 39.40 points, or 2 percent, to 1,930.67, its biggest loss since April 10. The drop pushed the index to its first monthly loss since January.
The Dow Jones industrial average plunged by 317.06 points, or 1.9 percent, to 16,563.30. The Nasdaq composite fell by 93.13 points, or 2.1 percent, to 4,369.77. The Russell 2000, an index of small company stocks, plunged by 26.50 points, or 2.3 percent, to 1,120.07
Exxon Mobil stock fell by $4.31, or 4.2 percent, to $98.94, after the energy company said that oil and gas production slipped by 6 percent, disappointing analysts.
Investors are also concerned about the outlook for growth in Europe as tensions escalate between the European Union and Russia after the downing of a passenger plane by anti-aircraft missile over eastern Ukraine. The EU on Thursday revealed the details of broad economic sanctions against Russia.
The main driver behind Thursday’s sell-off was a reassessment of the outlook for interest rates in the United States, said Paul Zemsky, chief investment officer of Multi-Asset Strategies and Solutions at Voya Investment Management.
Fed policymakers said the central bank would make further cuts to its monthly bond purchases, a program intended to keep long-term interest rates low and encourage borrowing and spending. Policymakers are also more optimistic about the outlook for the U.S. economy after a 4 percent expansion in the second quarter.
“We’re closer to the first move higher in interest rates,” Zemsky said. “And there’s definitely a camp that believes that the only reason that we’re at these levels is because the Fed has kept the rates at zero.”
Despite Thursday’s weak earnings reports, the overall outlook for company profits is still strong, Zemsky said.
Company earnings are still at record levels and expected to grow by 8.6 percent in the second quarter, according to data from S&P Capital IQ. That compares with growth of 4.9 percent a year ago.
Benchmark U.S. crude fell by $2.10 to close at $98.17 a barrel in New York, its lowest level since March 17.
The yield on the 10-year Treasury note edged up to 2.57 percent, from 2.56 percent Wednesday.