Quick Explanation of Yesterday’s Market Woes
Posted by Blain Reinkensmeyer
October 12, 2007 at 11:36 am
Yesterday the market, well mostly technology stocks and China related, took a beating starting at around 1 PM EST. The sell off continued until the end of the day, stocks rebounded fairly well. But what caused it?
The initial sell off came thanks to JPMorgan releasing a report on Baidu.com (BIDU, Charts) basically saying that the Chinese search engine’s Q3 revenue forecast would come in slightly below the investment bank’s earlier numbers.
So, the stock then started selling off heavily by institutional investors taking profits, and most of the technology sector went with it. The stock was down some 10% on the day after hitting new highs earlier. Some other big names that quickly jumped on the profit taking band wagon included Apple (AAPL, Charts), Research in Motion (RIMM, Charts), Amazon.com (AMZN, Charts) amongst many others.
The Chinese stocks though pulled back the most with stocks like Ctrip.com (CTRP) losing 8% on double its regular trading volume and China Medical (CMED) down as much as 14% intraday before settling for about a 7% loss.
The market rebounded slightly at the end of the day and with the S & P 500 closing down .5%, the Nasdaq lost over 1%, and the Dow Industrials lost .5%.
What has this market come to? We are tanking on BIDU news now. It is surprising that BIDU news could move the market so much, and the fact that it does is at least somewhat concerning. The volume with the selloff yesterday was very strong, which is concerning to say the least.
seems that the market is recovering from yesterdays sell off.
This week will be key to see if Thursday selloff was for real.
[...] week Thursday was a rough day for the stock market as Baidu.com then the economy triggered a sell off. This marked the first heavy distribution day - meaning distribution on above average volume - for [...]