Tech stocks drag market

Strategist: Selloff related to troubling trade tensions

U.S. markets staged a sweeping Uturn Monday as a battered technology sector again led the decline after Britain imposed a firstofitskind tax on the revenue of tech giants.

The Dow Jones industrial average swung more than 900 points, from 350 points up to more than 500 points into negative territory, wiping out its gains this year as last week’s gyrations carried over to Monday. The nosedive gained momentum during the last hour of trading.

The Dow closed the session down about 250 points, or 1 percent, at 24,443.

“This is the kind of response you see in financial markets when the real economy, profits, wages and growth, becomes more uncertain,” said Douglas HoltzEakin, president of the American Action Forum and former economic adviser to the late Republican Sen. John McCain of Arizona. “And it has become more uncertain from a policy point of view, around trade and the Federal Reserve — people are bouncing around on those. But the global growth outlook has become more uncertain, as well. There is a slowdown in some major economies, China, Russia and some of Europe. And the emerging markets are in trouble.”

Scott Wren, global equity strategist at the Wells Fargo Invest

ment Institute, said the market drop coincided with word that President Donald Trump and Chinese President Xi Jinping may not meet personally to discuss trade differences when the Group of 20 meets next month in Buenos Aires.

“If you had even a whiff of good news coming out of the G20,” Wren said, “the market would like that.”

The Standard & Poor’s 500stock index erased its 2018 gains, as well. The Dow, S&P 500 and Russell 2000 all dipped into correction territory — which is more than 10 percent off their high — in the Monday purge.

The techheavy Nasdaq composite, which was al ready in correction territory, plunged another 1.6 percent deeper into the red.

“Today’s stock market selloff is a direct result of the exacerbation of trade tensions,” said Kristina Hooper, global market strategist at Invesco. “The Trump administration just announced more tariffs will be put in place if the TrumpXi talks in November fail. It seems that we are headed for more tariffs, given that China does not appear interested in capitulating.”

Several major industrial stocks were down, including oil giant Chevron, Visa, United Technologies and Visa.

All the FAANG stocks — Facebook, Amazon, Apple, Netflix and Googleparent Alphabet — were in the red Monday as the Nasdaq sloped downward by 117 points. Amazon.com, led by Washington Post owner Jeff Bezos, was down more than 8 percent.

As of close Monday, Apple shares were down 8.54 percent from their alltime high. Search giant Google is down 19.51 percent from its high. Amazon, Facebook and Netflix are all down more than 20 percent from their highs, according to Bespoke Investment Group, putting them in bear market territory. Facebook is down 19.48 percent in 2018.

The technology stocks took a beating after reports that Britain plans to tax Facebook and Google revenue 2 percent in that country.

The Dow was led down by Boeing, maker of a 737 jet that crashed into the sea shortly after takeoff in Indonesia; all 189 aboard are presumed dead. Boeing was down 6.6 percent, and on its own shaved 150 points off the Dow. Both IBM and Microsoft were down more than 3 percent. IBM announced a $33 billion acquisition of Red Hat on Monday.

Real estate and utilities were helping offset some of the negativity in the S&P.

Wren also said the mar ket’s extreme swings on Monday were pushed by professional stock traders trying to see how low stocks can go.

“They are testing bottoms,” Wren said. “This is pure trading. It’s interest in looking at chart levels, support and resistance. This is very technical trading.”