Selling trend hits bull market

On Wednesday, another wave of selling struck the nearly decadelong U.S. bull market for stocks. Investors shed holdings, apparently worried that the extended surging economy, low interest rates and fast-growing corporate profits would soon be behind them. That day, the benchmark S&P 500 fell 3 percent, wiping out the year’s gains. The tech-heavy Nasdaq composite index declined 4.4 percent — falling more than 12 percent since early September.

Just over a month ago, the S&P 500 was up nearly 10 percent for 2018. Along with that came expectations that quarterly corporate earnings reports — juiced by a generous tax cut and strong economic growth — would continue sending stock prices upward. Wrong.

Instead, investors have zeroed in on risks, especially three concerns: rising commodity costs tied to import tariffs, expectations the Federal Reserve will keep raising interest rates and an economic slowdown in China.

The Dow Jones Industrial Average dropped 608 points, or 2.4 percent, on Wednesday. And the Nasdaq has now fallen into correction territory — a decline of more than 10 percent from a prior peak. The S&P is down to 2656.10, more than 9 percent off its recent peak on Sept. 20.

Sell-off comes as political discord has spiked with Election Day imminent. Some market observers think investors may be sidelining before what could be a close midterm election.

“I think people just want to clear the decks and get out before the midterms,” said Chris Rupkey, chief financial economist at MUFG Union Bank.

President Donald Trump has repeatedly cited the strong performance of the stock market as evidence of his administration’s business-friendly approach. But as the market has slid, he has ratcheted up his criticism of the Federal Reserve’s plan to raise interest rates. And the president’s trade war with China has increasingly preoccupied the markets, analysts said.