NEW YORK — A gradual decline in the stock market turned into a rout Friday. NEW YORK — A gradual decline in the stock market turned into a rout Friday. ADVERTISING After moving between small losses and gains for most
NEW YORK — A gradual decline in the stock market turned into a rout Friday.
After moving between small losses and gains for most of the day, the stock market plunged in the final hour of trading. The Dow Jones industrial average lost more than 200 points, half of them in the last 15 minutes. It was the worst drop in six weeks.
Some traders said the afternoon swoon came as large investors rearranged their holdings to match changes in the widely followed MSCI indexes. Others said rapid-fire automated sell programs kicked in as the decline accelerated, exacerbating the loss.
By late Friday, the market looked like it was “feeding on itself,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “Why did we go from trading flat to down 200 points at the close? It suggests to me that it was driven by computer models.”
The market managed to hold on to gains for the month, extending winning streaks for major indexes. The Standard & Poor’s 500 index ended May with its seventh straight monthly gain, its best run since 2009, but the last two weeks have been choppy. The index has declined on five of the last seven trading days and had its first two-week decline since November.
Traders and investors have started to question whether this year’s record-setting rally has run its course. Concern is building that the Federal Reserve may slow its $85 billion bond-buying program.
The program has supported the stock market as investors move money out of bonds and into riskier assets.
The bond purchases also hold down long-term interest rates to encourage borrowing and spending.
Subscribe today for unlimited access.
Already a subscriber?
Login
Not ready to subscribe?
Register for limited access.
If you have a print subscription but require digital access,
activate your account.
