Stocks sink as trade, tech concerns persist
Major stock indexes slumped Monday as a recent blitz of bad news about technology companies and festering worries about a trade war between the United States and China continued to leave investors jittery.
It was a broad sell-off. The Dow Jones industrial average plunged more than 758 points at its low in afternoon trading before clawing back some of its losses. The Dow finished the day down 458.92 points, or 1.9 percent, to 23,644.19. The Standard & Poor’s 500 index fell 58.99 points, or 2.2 percent, to 2,581.88. The Nasdaq composite fell 193.33 points, or 2.7 percent, to 6,870.12.
All three indexes are in the negative for the year, and the Dow and S&P 500 are in correction territory. A correction is generally considered to be a 10 percent drop from an index’s peak.
The prices of gold and silver, both considered flights to safety, were up on Monday.
The fears of an impending trade war have rocked mar-
kets since President Donald Trump announced tariffs of 25 percent on steel and 10 percent on aluminum that the United States imports. In response, China announced Monday that it has attached tariffs of up to 25 percent on 128 American-made products.
Monday marked the first time another country has placed tariffs on U.S. goods in response to the Trump administration’s trade sanctions.
Kate Warne, an investment strategist for Edward Jones, said the step by China is small but significant.
“The fact that a country has actually raised tariffs in retaliation is an important step in the wrong direction,” she said. “The tariffs imposed by China today lead to greater worries that we will see escalating tariffs and
the possibility of a much bigger impact than investors were anticipating last week. And that could be true for Mexico as well as for China.”
With many global markets closed for Easter, trading volume was fairly light in the morning but picked up in the afternoon as investors began unloading their holdings, said JJ Kinahan, chief markets strategist for TD Ameritrade.
“It’s a pretty broad-based sell-off, but it’s not a panicked sell-off,” he said. “It’s been very orderly. People haven’t gone to the places where they normally go when they’re panicked, so it seems like more of a re-evaluation of stocks rather than a sell-everything-I-possibly-can situation.”
Shares in major tech firms were among those hit hardest.
Amazon’s stock price fell $75.35, or 5.2 percent, to $1,371.99 after Trump, who has repeatedly assailed the online retail giant
over what he says is its abuse of the Postal Service and failure to pay adequate taxes, took another swipe at the company on Twitter.
“I guess as long as there is uncertainty around global trade, markets will be on edge,” said Charlie Ripley, investment strategist with Allianz Investment Management. “A lot of this today is being driven by technology. Trump had some unfavorable comments on Amazon and the post office, and that is helping drive down the tech sector.”
Shares of computer-chip giant Intel fell $3.16, or 6 percent, to close at $48.92 after a Bloomberg report that Apple may use its own chips in future products.
Shares of Tesla fell $13.65, or 5 percent, to close at $252.48 after questions about its self-driving technology system known as Autopilot. The company said Friday, after the markets closed, that a recent fatal crash involved one of its cars with an activated Autopilot.
In an unusual move, the National Transportation Safety Board, which is investigating the crash, publicly said Sunday that it was “unhappy” with Tesla’s public discussion of the accident.
Tesla’s revelation came amid wider concerns about the company’s financial woes, which Elon Musk, Tesla’s chief executive, joked about on Twitter on Sunday.
Technology stocks, trade concerns and slowing economic growth numbers are pulling stock indexes down, said James Norman, head of equity strategy at QS Investors.
The Nasdaq is close to losing all of its gains for 2018. That is a significant reversal for the technology industry, which had spearheaded much of the gains of the nearly 10-year bull market. Over the past five years, Amazon’s share value has increased 424 percent, Apple has grown 172 percent, Facebook 509 percent and Tesla 475 percent.
“Technology has been one of the best-performing areas of the market and drove much of the returns in 2017 and the first month of 2018,” Norman said. “With stretched valuations, investors are becoming concerned that they are overpaying for potential growth.”
In a Monday note to clients, Jason Pride, chief investment officer for private clients at Glenmede Wealth Management, cited trade-war fears as a driver in the market’s volatility.
“The Trump administration’s announcements on trade sanctions in total so far encompass a relatively small portion of overall U.S. trade,” according to Pride’s note. “However, this could only be the beginning, as the Trump administration ponders the extension of further sanctions on the Chinese trade relationship.”
With pork products among the goods subject to the Chinese tariffs, shares of Springdale-based Tyson Foods dropped $4.55, or 6.2 percent, to close Monday at $68.64.
The price of gold climbed 1.2 percent Monday to $1,343.60 an ounce and silver jumped 2 percent to $16.60 an ounce as some investors took money out of stocks and looked for safer investments.
Health insurer Humana was one of the market’s few winners after more reports that Walmart could buy the company or create a new partnership with it. Humana is a major provider of Medicare Advantage coverage for people age 65 and older. Humana shares rose $11.87, or 4.4 percent, to close at $280.70 while Walmart shares slid $3.42, or 3.8 percent, to $85.55.
Energy companies skidded as benchmark U.S. crude lost $1.93, or 3 percent, to $63.01 a barrel in New York.