US stocks opened lower on Thursday, as shares erased some of their gains from the previous session after hedge fund titan David Tepper said he was “backed short” against both stocks and bonds during an interview with CNBC.
What is going on
The Dow Jones Industrial Average DJIA,
it fell 306 points, or 0.9%, to 33,069.
The S&P 500 SPX index,
it dropped 45 points, or 1.2%, to 3,832.
The Nasdaq Composite COMP,
it fell 174 points, or 1.6%, to 10,534.
A day earlier, all three major indexes posted their best daily advance in three weeks, with the Dow advancing 526.74 points.
What drives the markets
Shares plunged early Thursday after Appaloosa Management’s Tepper shared a cautious outlook for the markets.
“I would probably say right now I’m leaning into equity markets because the upside doesn’t make sense to me when I have so many people, so many central banks, telling me what they’re going to do, what they want to do, what they expect to do.” , Tepper told CNBC’s “Squawk Box” Thursday morning.
His comments seemed to overshadow another batch of strong economic data, including a revised reading on third-quarter gross domestic product that showed the US economy was expanding faster than previously thought. Growth was revised to 3.2%, up from 2.9% in the previous revision released last month.
See: The economy grew at the rate of 3.2% in the third quarter thanks to strong consumer spending
A day earlier, the Conference Board’s Consumer Confidence Survey hit an eight-month high, which helped fuel a rally in stocks initially spurred by strong gains from Nike Inc. and FedEx Corp. released Tuesday evening. This optimistic outlook has helped stocks achieve their best daily performance in three weeks.
Volumes are starting to dry up as the year draws to a close, making markets more susceptible to larger moves. Wednesday saw the lowest combined volume on major exchanges since November 29, according to Dow Jones Market Data.
Many market strategists are defensively positioned as they expect stocks to fall to new lows in the new year.
See: Wall Street’s stock market forecast for 2022 was off the widest margin since 2008: Will next year be different?
Katie Stockton, technical strategist at Fairlead Strategies, warned clients in a note on Thursday that they should prepare for more downside ahead.
“We expect the major indices to hold flat next week, helped by oversold conditions, but would be preparing for further declines in January given the recent dip,” Stockton said.
Single Title Movements
AMC Entertainment Holdings
fell sharply after the theater operator announced a $110 million equity raise.
shares continued to tumble as the company was one of the worst performers in the S&P 500 this year.
Shares of Verizon Communication Inc.
they fell again on Thursday as the company heads into its worst year on record.
Shares of CarMax Inc.
it tumbled after the used-vehicle seller reported fiscal third-quarter profit and sales that fell well below expectations.