S&P 500, ASX 200, NIKKEI 225, ASIA-PACIFIC MARKET OUTLOOK:

• The S&P 500, Dow Jones and Nasdaq plunged 2.57%, 2.05% and 2.61% respectively
• The FOMC meeting revealed little changes; Apple and Facebook earnings beat
• Asia-Pacific indices are poised to open sharply lower following a sour US lead

Market Turmoil, FOMC, Earnings, Asia-Pacific Stocks Outlook:

Wall Street stocks had a bloodbath day without clear fundamental reasons behind it, leading market participants to question if the short squeeze in GameStop (+134%) and AME entertainment (+301%) have forced some hedge funds to liquidate their long positions in other stocks to cover losses. This appeared to have sparked broader risk aversion and encouraged more liquidation at a time when stock market valuations are at their highest levels since the Dotcom bubble.

The S&P 500, Dow Jones and Nasdaq indices fell the most since October 28th, ending -2.57%, -2.05% and -2.61% lower respectively. It seems like the time is ripe for a technical correction after all three indices broke their “Ascending Channels” formed since early November. Profit-taking activity may ramp up in the days to come should selling momentum start to gain traction. The VIX volatility index surged to 33.6 from 26.3 overnight, marking a 28% jump.

Apple, Facebook revealed upbeat Q4 earnings results after Wednesday market close, but their share prices were trading lower amid souring market sentiment. Tesla share price fell 4.2% after reporting a slight EPS miss. Here is a quick earnings takeaway from the trio:

Apple (beat):

• EPS: US$ 1.680 vs US$1.417 estimated, up 34.7% YoY
• Revenue: US$ 111.4 billion vs 103.1 billion estimated, up 21% YoY
• Sales from every product category registered double digit growth for the quarter

Facebook (beat):

• EPS: US$ 3.88 vs US$3.54 estimated, up 51.6% YoY
• Revenue: US$ 28.07 billion vs US$ 26.74 billion estimated, up 33.2% YoY
• Daily Active Users (DAU): 1.84 billion vs 1.828 billion estimated, up 10.8% YoY

Tesla (slight miss):

• EPS: US$ 0.80 vs US$ 1.03 estimated
• Revenue: US$ 10.74billion vs US$ 10.4 billion estimated, up 45.5% YoY
• Tesla expects 50% average annual growth in vehicle deliveries over a multi-year horizon
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The FOMC meeting offered little changes in terms of Fed’s monetary policy. The central bank will maintain an accommodative stance and continue asset purchasing at the pace of US$ 120 billion per month until its long-term goal of maximum employment and 2 percent inflation target are achieved. Today’s US Q4 GDP, initial jobless claims and core PCE inflation data are among the top events. Find out more from DailyFX economic calendar.

Sector-wise, all 11 S&P 500 sectors declined, with only 15% of the index’s constituents closing in the green on Wednesday. Communication services (-3.82%), consumer discretionary (-3.13%) and healthcare (-3.05%) were among the hardest hit.

Without much surprise, the Nikkei 225 and Australia’s ASX 200 indices opened sharply lower following a sour US lead. Equity index futures across Japan, mainland China, Australia, Hong Kong, South Korea, Taiwan, Singapore, India and Thailand are looking to retrace broadly.

The ASX 200 index tumbled more than 2% in early trading hours, dragged by healthcare (-2.33%), information technology (-2.27%), and financials (-2.01%) sectors, whereas defensive-linked consumer staples (-0.33%) and utilities (-0.36%) sectors registered smaller losses. All eleven ASX 200 sectors opened lower.