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Market Extra: As Dow industrials sink over 1,000 points, signs of panic-selling emerge in stock market

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Panic-like behavior was starting to set in on Wall Street on Thursday, at least from a technical perspective, as the Dow industrials shed all of the previous day’s gain, and then some.

Trading in New York Stock Exchange-listed stocks at midday Thursday exhibited panic-like-selling action as bullish investors suffered a powerful reversal of fortune that appeared to be gathering steam in the wake of the Fed’s early-May policy meeting, adding to a bruising stretch for buyers, sparked by concerns about rates.

The NYSE Arms Index, a volume-weighted breadth measure that tracks the ratio of advancing stock to declining stocks over the ratio of advancing volume over declining volume, was showing a reading of 2.588 for NYSE-listed shares. Many technicians say a rise to at least 2.000 suggests panic-like selling behavior.

The reading comes as the Dow Jones Industrial Average
DJIA,
-3.39%

 was off 3.1%, or over 1,050 points, at 33,027, looking at its sharpest one-day fall since 2020; the S&P 500 index
SPX,
-3.86%

 was off 3.4% at around 4,150; and the Nasdaq Composite Index
COMP,
-5.09%

 was trading 4.7% lower at 12,365.

The Nasdaq ARMs Index, however, wasn’t showing panic-like selling, with its level at 0.972, at last check Thursday afternoon.

The downtrend comes after Fed Chairman Jerome Powell on Wednesday said the central bank wasn’t likely to hike its benchmark interest rate by 75 basis points at its next meeting, a comment that immediately sent stocks higher and the dollar momentarily lower. Those trends, however, were reversing course on Thursday.

Market participants point to the continued rise in yields, both on a nominal basis and, a real basis, accounting for inflation, for the market selloff.

The 10-year Treasury note yield
TMUBMUSD10Y,
3.091%

was jumping to the highest rate since 2018.

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