Yesterday's gains proved nothing more than a dead-cat bounce, as traders unloaded their riskiest stock holdings across the board to gird against potential losses during earnings season.
Nasdaq suffered its biggest one-day percent decline since Nov. 9, 2011, and the Dow and S&P 500 took their biggest one-day point and percentage hits since February.
The Nasdaq has now dropped 7% below its 2014 closing high of 4,358 reached March 5, while the S&P 500 closed 39 points lower at 1,833, falling below its 50-day MA and close to crossing its 100-day MA.
Biotechs were hammered, with the top biotech index (IBB) closing -5.6% and dragging down the health care sector (-3.3%), the worst performing sector in the S&P 500; but there was plenty of company, with the tech, materials and financial sectors all down at least 2%.
The significant gap between losses for the Nasdaq (-3.1%) and Russell 2000 (-2.8%) vs. the Dow (-1.6%) and S&P 500 (-2.1%) suggests emotions played a major role in the selling of high-beta names.
Money rushed into Treasurys amid the heavy selling in equities; the 10-year yield slid 5.6 bps to 2.628%, posting its lowest close since March 3, and the yield on the 30-year bond sank 6.2 bps to 3.503%, the lowest close since last July.