Growth, Momentum Stocks Under Renewed Pressure
October 15 2018 - 12:07PM
Dow Jones News
By Avantika Chilkoti and Michael Wursthorn
Shares of Netflix, Amazon.com and other fast-growing companies
fell, resuming a stock-market pullback that has shaved billions of
dollars of value from one of investors' most popular trades.
Growth and momentum stocks, the linchpin of the 9 1/2 -year bull
rally, were under renewed pressure Monday, as investors continued
their retreat from those companies. Tech stocks in the S&P 500
fell 0.8% after being down more than 1% earlier in the session,
while other bastions of growth companies in the broad index,
including consumer-discretionary stocks, declined 0.2%.
A combination of fast-rising bond yields and continuing trade
fears has stirred investors to cut riskier stocks from their
portfolios, who are worrying that the huge profit margins among
many of these companies will fall.
Meanwhile, consumer-staples and real-estate stocks each rose
nearly 1%, as investors moved into sectors of the stock market that
tend to be more durable in challenging economic conditions.
"I'm starting to seriously worry that markets may trigger an
economic downturn earlier than widely expected, driving a
self-fulfilling market adjustment toward more normal (long-term)
valuations," said Erik F. Nielsen, group chief economist at
UniCredit Bank, in a note to clients. "There is little chance
global policy makers will come to the rescue in time."
The S&P 500 fell 0.1% in recent trading, while the Dow Jones
Industrial Average added 15 points, or less than 0.1%, to 25355.
The tech-heavy Nasdaq Composite fell further, shedding 0.5%.
Shares of Netflix fell 2.2%, while Amazon slipped 1.3%. Both
stocks are down 12% so far this month.
Salesforce.com, another growth stock, fell 2.7%, and Adobe shed
3%.
The losses shaved 0.4% from the Russell 1000 Growth index
Monday, deepening its losses for the quarter to 6.6%, putting the
benchmark on pace to snap a 12-quarter run of gains.
In Europe, the region's broad index, the Stoxx Europe 600, was
flat after negotiations around the U.K.'s impending departure from
the European Union suffered a fresh setback Sunday, with the two
sides failing to find a compromise on the issue of the Irish
border.
"A no-deal Brexit is likely to further curb growth expectations
and therefore the attractiveness of the U.K.," said Louise Dudley,
Global Equities Portfolio Manager, at Hermes Investment Management.
"Broadly our expectation is that we are likely to see higher costs
for businesses."
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
October 15, 2018 11:52 ET (15:52 GMT)
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