Bulls Against Wall as Seven-Month S&P 500 Trading Range Caves

Global Rout Wreaks Havoc on U.S. Stocks

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The worst drop for American equities in 18 months is setting up the biggest test since October for bulls after the floor caved in under the Standard & Poor's 500 Index.

More than $500 billion was erased as the S&P 500 slid 2.1 percent to 2,035.73 on Thursday, plunging below a level from March that had held as the index's lower boundary for seven months. Biotechnology companies dropped into a correction, down 12 percent from a July high, while chip stocks entered a bear market.

Lines on charts are exerting unusual influence on traders in 2015, a year in which the second-longest bull market since the 1950s has ground to a halt after two years of nearly straight-up advances. Concerns ranging from China to the Federal Reserve contributed to Thursday's retreat, which also sent the S&P 500 more than 2 percent below its 200-day moving average.

``It's definitely important that we closed below the March lows,'' said Jonathan Krinsky, chief market technician at MKM Holdings LLC. ``Eventually the market needed to correct and for that to happen, the larger-cap stocks needed to get hit. We're finally seeing that happen.''

Led by a 7.8 percent plunge in Netflix Inc., companies that have come to be known as the Fab Five because of their influence on the S&P 500 saw $49 billion in market value erased Thursday, the most since January 2013. Losses in Facebook Inc., Amazon.com Inc., Google Inc. and Apple Inc. pushed the Nasdaq 100 Index down 2.8 percent.