Dow falls more than 500 points in sixth-straight daily decline, S&P 500 hits new 2022 low


Stocks fell on Thursday as the market sell-off continued following yet another failed attempt to stage a comeback earlier in the session.

The Dow Jones Industrial Average dropped 500 points, or 1.58% and headed for its sixth-straight day of losses. The S&P 500 fell 1.57% and hit a new low for the year and Nasdaq Composite slipped 1.65% as tech-heavy selling persisted after taking a short breath.

Earlier in the session, the market tried to rebound as traders bought into beaten-down names. At one point, the Dow was up as much as 80 points at session highs, while the Nasdaq added 1.6%.

“Even if you say we’re in a bear market, there’s rallies within bear markets that can be very sharp,” said Truist’s Keith Lerner about the early market moves. “I think, at least short-term, and given how oversold we are and given that we’re starting to see people nibble at some of these areas that have been the most beaten up, I think that’s at least a silver lining in a sea of red and gloom over the last couple of days.”

Those gains slipped as the markets once again struggled to pick a direction and the S&P 500 was on the brink of bear market territory.

“It’s my opinion that this is a market that’s trading on emotions and not rational logic,” Jim Lebenthal of Cerity Partners told CNBC’s “Halftime Report” on Thursday. “Every day for the last however many days, you get this pop in the morning, and then it dribbles off.”

Some heavily shorted names led the brief rally from earlier in the day and continued to trade higher. While it was unclear what was driving gains from Lucid, GameStop and AMC, it could mean a short squeeze was taking place, where hedge funds that have profited from the steep losses in overvalued pandemic winners this year were finally closing out their short positions by buying back the shares.

Short selling is a tactic where funds sell shares that are borrowed from investment banks and so in order to close the trade they need to buy the stocks and return them. A short squeeze is a rally that results from that buying.

Shares of Lucid popped 11.8% while GameStop and AMC jumped more than 30% and 20%, before pulling back gains. Rivian Automotive also soared 16% on after reporting its latest quarterly results and Carvana, which hit a two-year low earlier in the session, surged more than 21%.

The catalyst driving those gains remained uncertain, though it could indicate some investors who have made hefty bets on the beaten-up meme stocks are upping the ante in the hopes of winning big, said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.

“I think it’s a desperate move, it’s a gambling move, it’s a lottery ticket hoping for a big payout and they may get lucky, but most likely, probably not,” he said.  

Apple lost nearly 5%, pushing the shares into bear market territory — down 23% from a 52-week-high. It came as Saudi Aramco surpassed the tech giant as the world’s most valuable company on Wednesday. Tesla and Meta Platforms also took the heat, falling 3.3% and 1.2%, respectively.

Meanwhile, Disney shares fell to a two-year low and were last down 2.7%. The media giant reported higher-than-expected streaming subscriber growth, but warned about the Covid impact on parks in Asia.

These moves came as traders pored over the latest U.S. inflation data. Fresh producer price index data, which measures prices at the wholesale level, rose 11% year over year.

Stocks have been under pressure recently, as concern over rising inflation and higher interest rates have dented market sentiment. Year to date, the S&P 500 is down about 17 and is trading nearly 18% below a record high set in January.

On Wednesday, the U.S. government posted the latest consumer price index reading, which showed an 8.3% year-over-year jump in April. That’s higher than what economists expected and close to a 40-year-high of 8.5%. The report caused investors to continue to sell risky assets like tech stocks.

But even as the sell-off gains steam, Tom Lee of Fundstrat remains bullish on stocks. He said if the market finds its footing “we’re in a world of double digit expected returns.”

“This week is interesting because the stock market declines have accelerated downwards, so the waterfall is accelerating but things that normally would corroborate a waterfall decline like yields or the VIX have not been,” Lee told CNBC’s “Closing Bell: Overtime.” “The bond market’s actually been pretty stable even in the face of a hot CPI and the VIX actually has been falling.”

He noted that of the 16 times since 1940 that the market has declined 16% in a four-month period, it was higher six months later in 12 of those events.



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