Dow industrials plunge 831 points; Apple and Amazon tumble too
NEW YORK» U.S. stocks plunged Wednesday as investors, fearful that rising interest rates and trade tensions could hurt company profits, ramped up their selling of highflying technology and internet stocks. The Dow Jones industrial average fell 831 points, its worst loss in eight months.
The losses were widespread, and stocks that have been the biggest winners on the market suffered steep de clines. Apple and Amazon, the two most valuable companies in the S&P 500, each had their worst day in 2½ years.
The Nasdaq composite, which has a high concentration of technology companies, suffered its biggest loss in more than two years and has dropped almost 8 percent since the start of October.
Wednesday’s remarkable drop should be placed in perspective. Since early 2009, the S&P 500 has quadru
pled, driven higher by the U.S. economic expansion, hefty profits for corporations and historically low interest rates, all of which makes stocks an attractive investment.
Stocks have slumped in the past week, largely because of worries about rising interest rates. The Federal Reserve recently raised shortterm interest rates for the third time this year. Strong economic data and a positive outlook from Fed officials last week sent bond yields sharply higher and sparked concerns about even higher interest rates.
Big moves in interest rates tend to unsettle investors, and they can push them to sell stocks and buy bonds instead. And there is still an overhang from the U.S. trade dispute with China, which accounts for sizable portions of some tech companies’ revenue.
Alec Young, managing director of global markets research at FTSE Russell, said investors fear that rising interest rates and growing expenses are going to erode the boost company profits have gotten from the GOP tax overhaul.
“The tax cuts juiced earnings this year, and that’s not sustainable,” he said. “The market’s starting to say that the glass may be half empty.”
President Donald Trump reiterated those concerns Wednesday. Trump told reporters after landing in Erie, Pa., for a campaign rally that he believes the Fed “is making a mistake” with its campaign of rate increases. “I think the Fed has gone crazy,” he said.
At the same time, Trump called Wednesday’s market plunge “a correction we’ve been waiting for for a long time.”
The Dow Jones industrial average gave up 831.83 points, or 3.1 percent, to 25,598.74. The S&P 500 in dex sank 94.66 points, or 3.3 percent, to 2,785.68. The benchmark index fell for the fifth consecutive day, which hadn’t happened since just before the 2016 presidential election.
The Nasdaq composite, with a large contingent of tech stocks, tumbled 315.97 points, or 4.1 percent, to 7,422.05. It’s fallen 7.5 percent in just five days.
The Russell 2000 index of smallercompany stocks shed 46.45 points, or 2.9 percent, to 1,575.41.
The market had enjoyed a stretch of relative calm, where even big intraday losses were erased by the end of the day. But over the past five days, the losses stuck, and Wednesday the selling went on right to the closing bell.
Some of the big losers were stocks that have scored doubledigit gains this year. Apple gave up 4.6 percent to $216.36 and Microsoft dropped 5.4 percent to $106.16. Amazon skidded 6.2 percent to $1,755.25.