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* CAI jumps on $1 bln takeover deal by Mitsubishi
* Bank stocks extend declines
* CBOE volatility index jumps to 20 points
* Indexes down: Dow 1.10%, S&P 0.74%, Nasdaq 0.36%
(Adds comment, details; updates prices)
By Shashank Nayar and Medha Singh
June 18 (Reuters) – The Dow fell 1% on Friday after Federal
Reserve official James Bullard said inflation was stronger than
anticipated and it would take the central bank several meetings
to figure out how to pare back stimulus.
The blue-chip Dow and the benchmark S&P 500 were set for
their worst day in a month after Bullard, president of the St.
Louis Federal Reserve, said he was among the seven officials who
saw rate increases beginning next year to contain inflation.
The CBOE volatility index, Wall Street’s fear gauge,
spiked to 20.60 points, its highest level since May 21 following
his comments.
“The commentary has sparked concerns about inflation and
people are questioning how transitory it will actually be, with
most of the data showing gains in excess of 3% towards the end
of this year,” said Sam Stovall, chief investment strategist at
CFRA Research.
Wall Street’s main indexes were jolted earlier this week
after the Fed unexpectedly signaled it could begin tapering its
massive stimulus sooner than expected, setting the benchmark S&P
500 on course to snap a three-week winning streak.
However, investors returned to heavyweight technology stocks
in particular on Thursday, focusing on the Fed’s projection of
the economy growing a faster-than-expected 7% this year.
Financials and energy sectors fell at least
1.8% each as investors booked profits in the top-performing S&P
sectors this year, while the tech-heavy Nasdaq edged
0.4% lower, the least among the major indexes.
At 9:45 a.m. ET, the Dow Jones Industrial Average was
down 371.35 points, or 1.10%, at 33,452.10 and the S&P 500
was down 31.41 points, or 0.74%, at 4,190.45.
Friday is also “quadruple witching day,” the quarterly
simultaneous expiration of U.S. options and futures contracts
which bring about increased trading volume at the market close
and can feed into market volatility.
Transportation finance and logistics company CAI
International Inc surged 46.0% after it agreed to a $1.1
billion takeover by Mitsubishi HC Capital Inc.
Declining issues outnumbered advancers for a 3.31-to-1 ratio
on the NYSE and for a 2.40-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and one new
low, while the Nasdaq recorded 18 new highs and 23 new lows.
(Reporting by Sagarika Jaisinghani, Medha Singh and Shashank
Nayar in Bengaluru; Editing by Maju Samuel)