Markets closed sharply lower once again on Tuesday, with the Dow and the S&P turning negative for the year. Tech and Internet-related companies, which have been suffering for a while now, once again took a hit, fueling worries of slowing global economic growth. However, the selloff now seems to have spread to the broader market, with retail and energy stocks contributing to the carnage.
The Dow Jones Industrial Average (DJI) fell 2.2% to close at 24,465.64. The S&P 500 declined 1.8% to close at 2,641.89. The Nasdaq Composite Index closed at 6,908.82, down 1.7%. A total of about 9 billion shares were traded on Tuesday, higher than the last 20-session average of 8.6 billion shares. Decliners outnumbered advancers on the NYSE by a 5.70-to-1 ratio. On Nasdaq, a 3.16-to-1 ratio favored declining issues.
How did the Benchmark Perform?
The Dow shed 551.80 points, after having lost as much as 648 points at the session’s lows. Apple, Inc.’s AAPL shares once again declined on Tuesday, falling 4.8%. The Dow was up 1.2% for 2018 entering Tuesday.
The S&P 500 tumbled 48.48 points, with consumer discretionary, energy and tech stocks once again weighing on the index. The Consumer Discretionary Select Sector SPDR (XLY) and the Energy Select Sector SPDR (XLE) were the biggest laggards declining 2.3% and 3.3%, respectively. The Technology Select Sector SPDR (XLK) gave up 2.2%. The S&P 500 was up 0.6% for 2018 entering Tuesday. Tuesday’s decline saw both the Dow and S&P 500 turning negative for the year.
The tech-heavy Nasdaq gave up 119.65 points, led by huge selloff in tech stocks. Shares of Amazon.com Inc. AMZN and Netflix Inc. NFLX declined 1.1% and 1.3%, respectively. The Nasdaq remains in correction territory, down more than 14% from its August peak. The index now holds on to 0.1% gain on the year.
Tech Stocks Continue to Suffer
Markets have been suffering since last month amid growing concerns of rising interest rates and worries of slowing global economic growth and trade tensions. Tech stocks, which have been responsible for the markets’ long rally, have been the biggest sufferers. On Tuesday, huge selloffs in tech stocks once again weighed on markets.
Tuesday declined came after the FAANG-family comprising Facebook Inc. FB , Amazon, Apple, Alphabet Inc. GOOGL and Netflix, all entered a bear market, losing more than 20% from their 52-week highs. Apple has been at the helm of the carnage, as investors continue to worry about slowing demand for the iPhone.
Also, reports from China further fueled fears, after Beijing uncovered widespread proof of anticompetitive behavior from rivals in Korea.
Broad-Based Selloff Weigh on Markets
Tuesday decline was lead by a broad-based selloff, as fears of a slowing global economy seem to be finally spreading to other sectors. Retail stocks were one of the biggest laggards, with Target shares plummeting after the company posted disappointing results. This weighed on the broader sector, sending the SPDR S&P 500 Retail (XRT) down 3.4%. The steep decline in retail stocks comes just ahead of the all-important holiday shopping season.
Also, energy stocks took a beating, as oil prices snapped its four- day run of gains. Oil prices plunged as much as 7% on Tuesday. The U.S. West Texas Intermediate ended the session down $3.77, or 6.6 %, at $53.43, its lowest level since October 2017. U.S. crude futures have declined almost 31% from a four-year high recorded in October.
The impending merger of SCANA Corporation SCG and Dominion Energy, Inc D made progress, post the receipt of another approval from the North Carolina Utilities Commission. ( Read More )
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