Reuters
Published Oct 24, 2018 05:51PM ET
Nasdaq confirms correction while S&P 500 and Dow erase 2018 gains
By Caroline Valetkevitch
NEW YORK (Reuters) - U.S. stocks plunged again on Wednesday, confirming a correction for the Nasdaq and erasing the Dow and the S&P 500's gains for the year, as disappointing forecasts from chipmakers and weak home sales data fueled jitters about economic and profit growth.
The Nasdaq closed down 12.4 percent from its Aug. 29 record closing high, falling 4.4 percent for the day in its biggest one-day percentage decline since Aug. 18, 2011.
Chipmakers Texas Instruments and STMicroelectronics (PA:STM) (N:STM) warned of slowing demand. They followed disappointing forecasts on Tuesday from Caterpillar (N:CAT) and 3M (N:MMM).
The forecasts gave investors further reason to pause and helped fuel the selling momentum, said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
"Once a snowball like this starts, it doesn't stop until it gets to the bottom of the hill. And we don't know if we're at the bottom yet," Tuz said.
Stocks have been punished this month by a range of worries, from rising borrowing costs and bond yields to Italy's budget and U.S. congressional elections due in less than two weeks.
On Wednesday, data showed sales of new U.S. single-family homes fell to a near two-year low in September, the latest sign that rising mortgage rates and higher prices were hurting demand for housing.
Adding to weaker sentiment in late trading, the Federal Reserve said in a report on the economy that U.S. factories have raised prices because of tariffs.
The Cboe Volatility Index (VIX), the most widely followed barometer of expected near-term gyrations for the S&P 500, jumped 4.52 points to close at 25.23, its highest close since Feb. 12. The S&P 500 fell for a sixth consecutive day.
"It looks like more panic and fear as the selling has continued to roll," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance based in Charlotte, North Carolina.
The Dow Jones Industrial Average (DJI) fell 608.01 points, or 2.41 percent, to 24,583.42, the S&P 500 (SPX) lost 84.59 points, or 3.09 percent, to 2,656.1 and the Nasdaq Composite (IXIC) dropped 329.14 points, or 4.43 percent, to 7,108.40.
Texas Instruments (O:TXN) dropped 8.2 percent, helping pull the Philadelphia Semiconductor index (SOX) down 6.6 percent in its biggest daily percentage drop since October 2014. Intel (O:INTC), due to report earnings later this week, fell 4.7 percent.
The beaten-down S&P technology sector retreated (SPLRCT) another 4.4 percent.
While third-quarter profit growth estimates have risen to 22.4 percent from 21.6 percent in the last 10 days, weaker forecasts have pulled down fourth-quarter growth estimates to 19.5 percent from 20 percent, according to I/B/E/S data from Refinitiv.
Declining issues outnumbered advancing ones on the NYSE by a 3.38-to-1 ratio; on Nasdaq, a 5.42-to-1 ratio favored decliners.
The S&P 500 posted 14 new 52-week highs and 91 new lows; the Nasdaq Composite recorded 15 new highs and 445 new lows.
About 9.6 billion shares changed hands on U.S. exchanges. That compares with the 8 billion daily average for the past 20 trading days.
After the closing bell, Microsoft (O:MSFT) rose 2.7 percent following the release of its results.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.