If you thought the reaction to yesterday's Fed commentary was overblown, don't read any further. Following up on a 1.4% loss yesterday, the S&P 500 Index dropped 40 points, or another 2.5%, today, ending at 1,588. It was the index's largest single-day loss since 2011. To be fair to the biggest losers of the day, they weren't alone in their misery; for every stock advancing there were nine that fell Thursday.
Understandably, homebuilders took a major hit today. The implication of the Fed's gradual tapering of quantitative easing efforts is higher rates in the long term, as the money supply stops expanding. Put simply, money will soon be harder to come by and, as lenders raise rates, it will become more difficult for homebuyers to finance real estate purchases. As a result, shares of residential construction giant PulteGroup shed 9.1%.
But PulteGroup was by no means the only business severely affected by the reaction to yesterday's Fed announcement. Newmont Mining , too, slumped 6.7%, and even hit a 52-week low during today's session. The company, which mines for gold and copper across the world, is highly dependent on the price of metals for its success. With gold slipping to 2-1/2-year lows, you can see why investors fled for the gates today. Gold, often used as a hedge for a declining dollar, often suffers as the dollar strengthens, as it did today.
Finally, Masco shares fell 6.1%. Masco, as a building materials supplier, faces the exact same dilemma as PulteGroup: its business outlook has materially declined in just a few days, as looming higher interest rates spell tougher times ahead for real estate. The stock has fallen more than 11% this week alone, with 9% of that decline coming in just the last two days.
No matter where interest rates are, Warren Buffett is always on the lookout for great investment prospects. But, as his fortune has grown, he's increasingly left many promising small companies on the table. Discover the name of one stock Buffett can only wish he could buy in our latest free report. Inside, you'll find revealed one promising stock that shares many of the same attractive traits as those already in Buffett's portfolio. But don't be the last to know; click here to get the inside scoop on this stock today!
The article Today's 3 Worst Stocks originally appeared on Fool.com.Fool contributor John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine . The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.