On Thursday, S&P500 (^GSPC ) has undergone the biggest drop since late September by 2.04% from 2085.0 to 2042.35 and ended at 2049.62, which is the lowest position since Nov,13.
One reason for that is because European Central Bank just extended its monthly €60bn stimulus program by six months to March 2017, but left its main interest rate on hold at a record low of 0.05%, which doesn’t satisfy the U.S. markets. Another factor is that people are worried about Fed would increase interest rate late in December while economic is still weak and not ready for that.
All 10 S&P 500 sectors continued to fell sharply from Wednesday in a second day for U.S. stocks. Healthcare (^SPXHC) ended down 2.2 percent, leading the day's decline, followed by energy (^SPNY), down 2 percent. At the same time, the CBOE Volatility index .VIX, which measures the stock market's fear, jumped up to13.8 percent closing at its highest since Nov. 17. Investor participation was above average, with more than 990M shares changing hands at the NYSE floor. Moreover, about 8.2 billion shares changed hands on U.S. exchanges, compared with the 6.8 billion daily average for the past 20 trading days, according to Thomson Reuters data.
Some of the selling was related to leverage funds that were likely forced to close positions as volatility jumped. According to Bank of America research, these funds have returned to the level of leverage they had prior to dramatic selloff in late August.