Instant View: U.S. share tumble continues, Nasdaq flirts with correction

NEW YORK (Reuters) – Wall Street indexes continue their decline in volatility on Thursday as they continue to shun risky investments, and the Nasdaq dipped in to correction territory.

During the last day of the session, it was less than 2 percent after shedding 3 percent in the previous day's session, then found its jogging and cut losses. The Nasdaq fell as much as 10.3 percent from its high record high, reached on Aug. 29 before likewise bouncing to almost unchanged. If it's closed at the worst level for the day so far, it would confirm a correction.

COMMENTS:

DENNIS DICK, TRADITIONAL TRADER, BRIGHT TRADING LLC, LAS VEGAS

"You've got a few people who have been undercover here. We saw this morning and ended up being suckers rally. Then you had buy-the-dippers coming in here saying this was too much too fast. "

"What had we down this morning was fear. Traders from the day before thinking we were going to work but did not work. I think its money managers coming in saying it was too much too fast …

"Technology is leading the way here. Its leading us back. Are we out of the woods here? I do not think so. You're going to see a lot of volatility in the next week or so. "

"If we can get any (U.S./China)meetings going that's going to help the market. It could kick start us. "

KEITH LERNER, CHIEF MARKET STRATEGIST, SUNTRUST ADVISORY SERVICES, ATLANTA:

"When you have a shock day like yesterday, people are caught off guard, there is a lot of adjustments going on below the surface. And there is a lot of volatility the day after a shock day, and over the next several days or weeks. "

BERNARD BAUMOHL, MANAGING DIRECTOR AND CHIEF GLOBAL ECONOMIST, THE ECONOMIC OUTLOOK GROUP, PRINCETON, NEW JERSEY

"We are going to have a significant pull-back in the final quarter (of 2018). We could not conceive this easily, but it could conceivably maintain its strength in the face of rising short-and-long interest rates. Ironically this is also happening at a time when the economic expansion was beginning to show signs of wear and tear. The U.S. economy is starting to lose some steam. We saw it in consumer spending, we're seen in home sales, and in auto purchases.

"When you combine a decline in sales with an increase in costs, it is important to consider that it is important to know that you are going to be affected by it. add some downward pressure on prices.

"That's been behind the decline in the market the past few days. It's rising costs and the difficulty that companies have in passing on these costs to consumers. The increase in interest rates and the cost of capital and servicing debt.

"The outlook is squeeze on margins, so the expectations for S & P 500 profits will obviously be in decline. It's not going to be anywhere near the 25 percent rise in the first and second quarters. But the stock market reflects future earnings. There we are looking at the growth in earnings over the race of 2019. "

STAN SHIPLEY, STRATEGIST MARKET, EVERCORE ISI, NEW YORK:

"Fundamentals have not changed materially. The economy looks strong and you're still seeing gradual inflation. What's going on now that they have been a lot cheaper. People could say later on, the world is not ending and I am going to start buying. When does that happen? We do not know. Technically, there is no sign that this is ending here. Usually, you will find some floor and bounce off that floor, but it will come back and test that floor and it's a good luck that it will rally from that floor. But that takes awhile. It's not something that happens overnight. "

FRITZ FOLTS, CHIEF INVESTMENT STRATEGIS, 3EDGE ASSET MANAGEMENT LP, BOSTON

"If we were not just heading into the past seasons we would have gotten the result we've had in 2 days. You want to take some risk off the table going into that. They are concerned that they are so many times that they are going to have a lot of money. I think they are concerned that they're going to start to write that they're not going to hold. "

"We're not completely out of the equity market. Jay Powell thinks it might be necessary to make a statement that makes it sound a little less hawkish then you definitely could see snap-back rally …. There's no Powell put. I do not see it in his make-up. "

MICHAEL O'ROURKE, CHIEF MARKET STRATEGIST, JONESTRADING, GREENWICH, CONNECTICUT

"There was a major sell-off overnight (in Asia) following the sell-off yesterday. We never really got firm jogging. People are basically unsure what to do, and we did not see any real developing shift in the marketplace environment … President of the rally this morning was President Trump talking up to a meeting with Chinese President Xi at the G-20 summit. But he indicated that a week ago last Thursday. So that was not a real news development, and the market went back to de-risking again. "

"You see more companies giving weaker guidance going forward. That's an issue. People worry that there is a cyclical top coming up for earnings. Then we have two main headwinds: the trade war with China and rising interest rates. How are we going to be able to get back to the top of the world? For most of this bull market, we have had a very good monetary policy. If anything, multinationals were benefiting from doing things offshore. Those were positive catalysts for global markets. Now they're negative headwinds. Investors are concerned. "

MARKET REACTION

STOCKS: The Dow was down 301 points, or 1.15 percent, having been down more than 2 percent. The S & P 500 also fell to 0.93 percent loss. It is down to the lowest since July 2. The tech-heavy Nasdaq has been down 0.16 percent, having decreased more than 1 percent and hitting its lowest since May 9.

TREASURIES: The yield on the US 10-year Treasury note fell to 3.1479 percent.

VIX: The Cboe volatility index was up 5 percent at 24.12. Earlier it reaches its highest since Feb 12.

Dollar: The U.S. dollar index was off 0.5 percent.