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 The Nasdaq biotechnology index <.NBI> shed 5.6 percent, its biggest
one-day drop since August 2011, adding to recent losses since a
large drop in Gilead more than two weeks ago triggered a wider
selloff for biotechs and other recent big gainers. That index is now
down 18.8 percent since its February 25 record close.
The S&P 500 also posted its biggest percentage loss since February
3, while the Nasdaq has dropped 7 percent from its closing high for
the year, set on March 5. All stocks in the Nasdaq 100 index <.NDX>
posted a loss, with the exception of CH Robinson Worldwide <CHRW.O>,
which ended up 1.6 percent at $53.80.
The selling also hit the shares of three companies in their first
day of public trading after their initial public offerings were
priced on Wednesday night. All three IPOs ended lower.
"Momentum names have been driving this market higher. A lot of these
names have been trading at stratospheric valuations, and on
long-term outlooks, that may or may not materialize. The question
is, 'At what point do they get too expensive?' Right now, I think
they're looking a little expensive," said Randy Frederick, managing
director of active trading and derivatives for Charles Schwab in
Austin, Texas.
There's a good chance the selloff in these stocks could continue and
the pullback could extend to areas beyond the momentum names,
Frederick said.
The CBOE Volatility Index or the VIX <.VIX>, Wall Street's measure
of investor anxiety, jumped 15 percent, its biggest daily percentage
gain since February 3, to end at 15.89.
Alexion Pharma <ALXN.O> was the S&P 500's biggest decliner, off 7.5
percent at $144.19, followed by Gilead Sciences, down 7.3 percent at
$65.48, and TripAdvisor, down 7 percent at $81.90.
The move was a sharp reversal from the previous day, when shares
rallied after minutes from the latest Federal Reserve policymakers'
meeting showed members were more keen to keep rates low than
previously expected.
The Dow Jones industrial average <.DJI> plummeted 266.96 points or
1.62 percent, to end at 16,170.22. The S&P 500 <.SPX> lost 39.09
points or 2.09 percent, to close at 1,833.09.
The Nasdaq Composite <.IXIC> dropped 129.794 points or 3.1 percent — its biggest daily percentage loss since November 9, 2011 — to
4,054.106.
The S&P 500 closed below its 50-day moving average for the first
time since February 10.
The stock of bailed-out auto lender Ally Financial Inc <ALLY.N> fell
4.1 percent to close at $23.98 in its market debut.
Two biotech companies — Cerulean Pharma Inc <CERU.O> and Adamas
Pharmaceuticals Inc <ADMS.O> — also slid in their trading debuts.
Cerulean fell 2.1 percent to close at $6.85, while Adamas lost 12.4
percent to end at $14.01.
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Among Internet-related tech shares, which were among last year's
biggest advancers, Facebook Inc <FB.O> fell 5.2 percent to end at
$59.16, while Netflix Inc <NFLX.O> sank 5.2 percent to close at
$334.73.
"You've basically more than erased the bounce of the last two days,
so I would imagine any bounce from these levels is probably going to
be met with supply because the market is on very tenuous legs right
now," said Michael James, managing director of equity trading at
Wedbush Securities in Los Angeles.
Among other big decliners, shares of Imperva Inc <IMPV.N> plunged
43.7 percent to $28 after the data center security company reported
preliminary first-quarter results. Rival FireEye Inc <FEYE.O> lost
11.8 percent to $49.75.
On the earnings front, Bed, Bath & Beyond <BBBY.O> shares slumped
6.2 percent to $63.72 after the home-goods retailer reported
fourth-quarter sales that fell from a year ago and gave a
first-quarter outlook that was below expectations.
The day's economic data was encouraging, however, with initial
jobless claims dropping sharply last week to the lowest in almost
seven years, suggesting job growth may be picking up after a harsh
winter.
After the bell, shares of Gap <GPS.N> dropped 2.4 percent to $38.33.
The slide followed the clothing retailer's report on its March sales
and reaffirmation of its 2014 outlook. In contrast, shares of H&R
Block <HRB.N> rose 7.7 percent to $30.60 in extended-hours trading
after the U.S. tax preparer said it would sell some assets and
transfer certain liabilities to BofI Federal Bank.
Volume was high, with 7.5 billion shares changing hands on U.S.
exchanges, well above the 6.8 billion average so far this month,
according to data from BATS Global Markets.
Decliners outnumbered advancers on the New York Stock Exchange by a
ratio of 3.6 to 1. On the Nasdaq, about 6.6 stocks fell for every
one that rose.
(Editing by Jan Paschal)
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