Dow falls 300 points as David Tepper says he is ‘leaning short’ against stocks

What’s driving markets

Stocks tumbled at the open on Thursday after Appaloosa Management’s Tepper shared a cautious outlook for markets.

“I would probably say I’m leaning short on the equity markets right now because the upside-downside doesn’t make sense to me when I have so many people, so many central banks, telling me what they are going to do, what they want to do, what they expect to do,” Tepper said Thursday morning on CNBC’s “Squawk Box.”

His comments seemed to overshadow another raft of strong economic data, including a revised reading on third-quarter gross domestic product which showed the U.S. economy expanded more quickly than previously believed. Growth was revised up to 3.2%, up from 2.9% from the previous revision released last month.

See: Economy grew at 3.2% rate in third quarter thanks to strong consumer spending

A day earlier, the Conference Board’s consumer confidence survey came in at an eight-month high, which helped stoke a rally in stocks initially spurred by strong earnings from Nike Inc. and FedEx Corp. released Tuesday evening. This optimistic outlook helped stocks clinch their best daily performance in three weeks.

Volumes are starting to dry up as the year winds down, making markets more susceptible to bigger moves. According to Dow Jones Market Data, Wednesday saw the least combined volume on major exchanges since Nov. 29.

Many market strategists are positioned defensively as they expect stocks could tumble to fresh lows in the new year.

See: Wall Street’s stock-market forecasts for 2022 were off by the widest margin since 2008: Will next year be any different?

Katie Stockton, a technical strategist at Fairlead Strategies, warned clients in a Thursday note that they should brace for more downside ahead.

“We expect the major indices to remain firm next week, helped by oversold conditions, but would brace for more downside in January given the recent downturn,” Stockton said.

Single-stock movers

• AMC Entertainment Holdings 
  AMC,
  -14.40%
  was down sharply after the movie theater operator announced a $110 million equity capital raise.

• Tesla Inc. 
  TSLA,
  -3.25%
  shares continued to tumble as the company has been one of the worst performers on the S&P 500 this year.

• Shares of Verizon Communications Inc. 
  VZ,
  -0.48%
  were down again on Thursday as the company heads for its worst year on record.

• Shares of CarMax Inc. 
  KMX,
  -8.05%
  tumbled after the used vehicle seller reported fiscal third-quarter profit and sales that dropped well below expectations.