Stocks Face Full Plate Friday After Wild Selloff

NEW YORK ( TheStreet) -- In one of the more remarkable days in recent memory on Wall Street, stocks broke down Thursday afternoon, with the Dow rapidly losing nearly 1,000 points before recovering to close down about 350 points. The wild move, being blamed on a trading error, punished a market already wounded from a European debt overload.

Observers will continue to dissect what happened during Thursday's history-making selloff into the morning and beyond, but they'll also monitor other market-moving items before Friday's opening bell:
  • Parliamentary election results from the U.K.
  • Germany's debate and vote on the Greece rescue measure.
  • The April jobs report from the Labor Department, which is expected to show a pickup in nonfarm payrolls, though the nation's unemployment rate could hold steady at 9.7%.
  • "If we get good news on those three things ... I think this reversal we saw in the last half hour or so might continue at the open," said Phil Orlando, chief equity market strategist at Federated Investors. "We got oversold, stupidly oversold at one point. But even before the near 1,000-point drop , we were oversold. People were selling on emotion," later adding, "maybe, who knows, we'll actually start paying attention to fundamentals."

    But as quickly as that massive plunge happened around 2:40 p.m. EDT on Thursday, stocks rebounded and recovered off their worst levels. CNBC began speculating that some sort of computer system or human error may have been at the root of the steepest drops. The New York Stock Exchange reported that it saw no error from itsr vantage point.

    Rumors also centered on possible erroneous trades for Procter & Gamble ( PG) shares, which imploded in baffling fashion during the accelerated decline.

    By late Thursday, the Nasdaq Stock Market, which also reported no system problems, said it would cancel trades between 2:40 p.m. EST and 3 p.m. EST of "greater than or less than 60% away from the consolidated last print in that security at 14:40:00 or immediately prior." NYSE Arca, the electronic platform of NYSE Euronext, said it would do the same.
    Stock Market Losers
    Biggest Declining Stocks

    Erroneous or not, the Dow Jones Industrial Average still lost 348 points, or 3.2%, to close at 10,520, its largest single-day fall since February 2009, as uncertainty from overseas continued to weigh. The S&P 500 shed 38 points, or 3.2%, to 1128, while the Nasdaq lost 83 points, or 3.4%, to 2320.

    At one point, the Dow was down 998.50 points, or 9.2%, and fell to 9,869.62, the blue-chip average's largest intraday decline ever. The Dow also had its highest one-day swing ever -- 1010.14 points.

    Even before the most massive declines of the day, stocks were weaker as eurozone contagion fears picked up again, stoking investors' fears and sending markets roiling for yet another day. Moody's Investor Service said the banking systems in several European nations including Italy, Spain, Ireland, Portugal and Britain could be stung as sovereign debt woes intensify, according to The Associated Press. Those lingering doubts helped put a damper on the euro, as the dollar hit a new 14-month high against the currency.

    Market participants remain skittish about the ramifications from a series of uncertainties coming out of Europe. German legislators are scheduled to vote on the bailout measure Friday, but a report said Germany's Social Democratic Party would shy away from voting in favor of the rescue bill.

    Meanwhile, Greek lawmakers moved to pass a set of austerity cuts today. Just before the most prenounced losses of the day, Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said pictures of violent protests from outside the parliament building, coupled with the S&P's move below its January high at 1150, was accelerating the sell-off mood in the afternoon.

    "The economic data has been good, but you can throw that out the window now," Detrick said, adding "when emotions run high, even technicals don't matter so much."

    And while uncertainty swirled in the eurozone, the European Central Bank announced it kept its key interest rate unchanged at 1%, as expected. But during a press conference following the announcement, it was widely reported that ECB President Jean-Claude Trichet said central bankers didn't discuss the buying of government bonds as a part of their meeting.

    "Trichet could have shown some leadership this morning," Orlando added. "Whatever. Just announce something bold and demonstrate some leadership. When that didn't happen, that really set the tone for the day."

    "The hopes were that this IMF/German bailout would be the rescue for Greece and the euro currency. But if you look at credit spreads, that's clearly not the case," said Michael Pento, senior market strategist at Delta Global Advisors. "I think this reminds me too much of the summer of 2007 when we first saw the Bear Stearns hedge funds collapse. I think this is the first salvo of a metastasizing sovereign debt crisis that will spread," also saying the contagion could go beyond Europe and into Asia and the U.S.

    "It's a very real crisis," he said. "I'm afraid over the next few years here it's going to come to America. And I guarantee you this -- there is no IMF bailout coming to the U.S."

    Overseas, Hong Kong's Hang Seng lost 1% while Japan's Nikkei shed 3.3%. The FTSE in London fell 1.5% and the DAX in Frankfurt was lost 0.8%.

    The Economy

    A day before the U.S. government is scheduled to release its April nonfarm payrolls report, investors began digesting the Labor Department's initial jobless claims data for the week ended May 1. The government said new filers edged lower last week by 7,000 to 444,000. Economists were expecting claims to dip to 440,000, from the 448,000 pre-revised tally, according to consensus figures provided by Briefing.com.

    For Friday's report, economists are projecting April job growth of 187,000 after March's increase of 162,000 jobs. But Delta Global's Pento said there's a strong chance the market will not see a lift from tomorrow's jobs news because of the European overhang.

    The government also said productivity climbed up at a seasonally adjusted 3.6% annual clip in the first quarter, though consensus estimates were looking for a 2.4% increase. The rise is slightly off the revised 6.3% gain in the fourth quarter.

    Retail same-store sales data for April came in largely below predictions. According to a gauge from TheStreet, 16 of 26 retailers missed expectations. Costco ( COST), Nordstrom ( JWN), Macy's ( M) and Limited Brands were some of the better performing concerns in the tracker, though teen retailer Hot Topic ( HOTT) and Abercrombie & Fitch ( ANF) posted more lackluster results.

    Abercrombie shares tumbled 8.6%, while Hot Topic shed 8.5%.

    The Energy Information Administration said natural gas storage levels in the lower 48 states saw an injection of 83 billion cubic feet for the week ending April 30. The tally landed at the upper end of an estimate range offered by Platts saying analysts estimated an additional 80 to 84 billion cubic feet to natural gas stocks. Stocks now stand at 1.995 trillion cubic feet, which is 5.1% above the year-ago level and 18.8% ahead of the 5-year average.

    Federal Reserve Chairman Ben Bernanke spoke in Chicago in the morning where he discussed lessons learned from the bank stress test program one year ago.

    Company News

    Cigna ( CI) reported first-quarter earnings that rose 36% on improvements across its global health service businesses. Adjusted income from operations came in at $1.01 a share. Analysts had been expecting a profit of 90 cents a share.

    Alcatel-Lucent ( ALU) , the telecommunications-equipment maker, reported a wider first-quarter loss of 515 million euros ($658 million) compared with a year-earlier loss of 402 million euros as part shortages crimped sales.

    Transocean ( RIG), the owner of the now infamous oil rig that sank in the Gulf of Mexico and unleashed a torrent of crude into the ecosystem, reported earnings largely in-line with expectations late Wednesday. But an SEC filing released yesterday also said officials from both the Department of Homeland Security and the Interior Department have opened an investigation on the accident. Shares traded 4.2% lower today.

    Kraft Foods ( KFT) traded 1.8% lower ahead of its first quarter earnings announcement due late today.

    Commodities and the Dollar

    Natural gas futures began selling off further after the reported storage injection, as the June delivery contract dipped 6 cents to settle at $3.93 per million British thermal units. The firming greenback also weighed on oil prices again today, as crude for June delivery was slipped $2.86 to finish at $77.11 a barrel.

    The weakened euro was also having an effect elsewhere in commodity markets, as the June gold contract surged $22.30 to settle at $1,197.30 an ounce.

    The dollar was trading higher against a basket of currencies with the dollar index up by 0.8%.

    Treasuries

    The benchmark 10-year Treasury surged 1 9/32, pushing the yield down to 3.394%.

    The two-year note improved 6/32, diluting the yield to 0.781%. The 30-year bond soared 3 15/32, slumping the yield to 4.193%.

    --Written by Sung Moss and Melinda Peer in New York