DOW PLUNGES AGAIN, ERASING ALL OF ITS GAINS MADE IN 2018
Another torrent of selling gripped Wall Street on Wednesday, sending the Dow Jones Industrial Average plummeting more than 600 points and wiping out its gains for the year.
The Nasdaq composite, with a hefty roster of tech stocks, bore the brunt of the sell-off, leaving it more than 10 percent below its August peak, what Wall Street calls a “correction.”
Disappointing quarterly results and outlooks continued to weigh on the market, stoking investors’ jitters over future growth in corporate profits. Bond prices continued to rise, sending yields lower, as traders sought safe-haven investments.
The Dow Jones industrial average dived more than 600 points Wednesday as another wave of volatility swept through U.S. financial markets.
The blue-chip index bobbed in the red most of the session, dragged down by a weak housing report and a beleaguered technology sector.
The tech-heavy Nasdaq took the steepest losses of the day, down 4.4 percent. It’s now in correction territory, down 11.4 percent from its September 2018 high, according to Bespoke Investment Group.
The sell-off in tech capped a horrendous month for the darlings of Silicon Valley, with painful losses in share value on Wednesday: Netflix lost 9.4 percent. Facebook lost 5.4 percent. Amazon, 6 percent. Apple, 3.4 percent.
The Dow’s drop was a sharp reversal from its upward momentum as trading opened that came off of a strong earnings report from aircraft maker Boeing. By day’s end, it had wiped out all of its 2018 gains, falling 606 points, or 2.4 percent, to close at 24,584.50. The Dow is looking at its worst month in eight years.
The Standard & Poor’s 500-stock index was off 3 percent Wednesday.
“This could be a bull market correction or something more serious,” said Michael Farr, an investment manager in Washington. “This drop is coming out of technology.”
Some Wall Street experts said the steep sell-off in the last hour of trading was a scramble by sellers who are looking beyond this year and toward more modest earnings in 2019 — in the neighborhood of 5 percent growth instead of 20 percent.
They are also unnerved at the slowdown in the Chinese economy, the strong U.S. dollar and other global menaces such as a looming Italian financial crisis, U.S. tensions with Saudi Arabia and the latest domestic crisis involving a series of homemade bombs sent this week to the Clintons, Obamas and CNN.
Investors are closely watching other signals, too, including new inflationary concerns over tariffs and the Federal Reserve’s interest rate increases, which are coming under heavy criticism from President Donald Trump.
In a Wall Street Journal interview published Wednesday morning, Trump took aim at the Fed chair he appointed, Jerome Powell: “I’m not happy with what he’s doing at all.”
“He was supposed to be a low-interest-rate guy,” the president said. “It turned out he’s not.”
“One loyal follower of our research suggested that perhaps the market is spooked about the mixed-up mix of U.S. fiscal, monetary, trade, and foreign policies,” according to Ed Yardeni, president of Yardeni Research. “I’ve recently been describing them as akin to driving a car with one foot pushing hard on the accelerator while the other is tapping on the brakes.”