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Wall Street closes sharply lower amid abrupt sell-off

written by Bella Palmer

All three major U.S. stock indexes dropped late in the session to close 1.3 per cent to 1.5 per cent below Tuesday's close

U.S. stocks ended lower on Wednesday after an abrupt mid-afternoon decline ended Wall Street's rally, which had been led by declining interest rates and the Federal Reserve's dovish turn.

All three major U.S. stock indexes dropped late in the session to close 1.3 per cent to 1.5 per cent below Tuesday's close.

Stocks were "near all time highs, they hit resistance," said Jay Hatfield, portfolio manager at InfraCap, noting the downtrend was "surprisingly vociferous, things went from hot to cold real fast."

It is surprising how aggressive the sell-off is, but it makes sense considering how far we have come, Hatfield said.

FedEx shares shed 12.1 per cent after the package delivery company missed quarterly profit estimates and cut its full-year revenue forecast as it battles United Parcel Service in what is shaping up to be a weak holiday season. UPS lost 2.9 per cent.

Some traders said the market selloff could have been hastened 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 close 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 climbed 4.4 per cent after the memory chipmaker forecast quarterly revenue above estimates.

During the session, the S&P 500 rose within 0.5 per cent of its all-time closing high. Touching 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 per cent below its record closing high.


The opinions expressed by our writers are their own and do not represent the views of UK Investment Guides. The information provided on UK Investment Guides is intended for informational purposes only. UK Investment Guides is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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