Stocks close lower ahead of jobs report
Dow falls 139 points and S&P drops 0.9 percent. Investors wait for direction from Friday's employment numbers.
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Stocks tumbled in the final hour of trading to close lower as investors took profits ahead of a key government jobs report on Friday, and as energy shares extended losses after crude oil plunged below $100.
The Dow Jones Industrial Average fell 139.41 points, or 1.1 percent to close at 12,584.17, after sinking more than 200 at one point in the last hour of trading.
The S&P 500 fell 12.22 points, or 0.9 percent, to close at 1,335.10, while the Nasdaq declined 13.51 points, or 0.5 percent to close at 2,814.72. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose nearly 8 percent above 18.
All key S&P 500 sectors fell, led by energy, telecom and materials.
"People are a little bit nervous in front of tomorrow’s nonfarm payroll report," said Kenneth Polcari, managing director at ICAP Equities.
Already this week, investors learned private sector job growth was slowing, and unemployment claims rose more than expected, Polcari said.
While the broader market was higher for a good part of the day, there was "no real sense of strength" in the market, he added.
"And then….sellers took advantage once again of any perceived strength and said it's time to take money off the table," Polcari said. He added, however, that while the market was down significantly, the losses didn't compare to the sharp drops in commodity prices, and there was little sense of panic on the trading floor.
Earlier, as oil prices tumbled to less than $100 a barrel, retail stocks gained, a relationship that Jim Paulsen, Chief Investment Strategist at Wells Capital Management doesn't think is coincidental.
"Oil prices historically have been a huge determinant for the direction of consumer discretionary stocks, relative to the market," Paulsen said.
Retail stocks could do even better if job growth rebounds, he added. In fact, the slowly strengthening job market has lent support to consumer discretionary stocks, which would have been hurt more by the rising price of crude oil since the fall, Paulsen said.
Oil prices fell sharply after the market settled as the CME raised price limits on crude oil, heating oil and RBOB futures until 5:15 p.m today, according to a CME spokesperson. Oil slid throughout Thursday's session amid concern about a reduction in demand, given high gas prices, and rising interest rates.
U.S. light crude settled at $99.80 after falling $9.44 or 8.6 percent. London Brent crude fell nearly 9 percent to below $111.
The dollar jumped against a basket of currencies as investors took comments by European Central Bank President Jean-Claude Trichet to mean a rate rise wasn't likely next month but could happen in July. The ECB left rates unchanged at 1.25 on Thursday.
And silver futures continued to plunge, setting 8% lower at $36.23 an ounce, while gold futures fell more than 2 percent to $1,480.90. Silver has had its worst four-day drop since 1983, according to Bespoke Investments. (Read more: Silver a Warning Sign for Everyone?)
In earnings news, General Motors traded flat to slightly lower despite beating both profit and revenue expectations. The once bankrupt automaker credited sales in North America and Asia for the gains.