NVDA NVIDIA Corporation

By Amrith Ramkumar and Avantika Chilkoti 

A punishing stretch for markets continued Wednesday, with technology stocks leading major indexes lower yet again as worries about global economic growth and corporate earnings continued to spook investors.

The tech-heavy Nasdaq Composite slumped 2.3% and was on track to close in correction territory, defined as a drop of 10% from a recent peak. Semiconductor stocks dragged the technology sector lower following weaker-than-expected sales targets from Texas Instruments, and downbeat earnings from AT&T hurt communications shares.

The S&P 500 slid 1.5% and is on pace for a sixth consecutive decline and 13th drop in the past 15 sessions. The Dow Jones Industrial Average fell 230 points, or 0.9%, to 24961 after opening slightly higher. Like the S&P, the blue-chip index is more than 7% off its recent all-time high and has been recording bigger-than-normal intraday swings.

Anxiety about weakness in the global economy and a slowdown in corporate profitability have swung global stocks and commodities lately. The declines in tandem across asset classes have raised concerns that the worst could still be ahead for investors, who are also grappling with the impact of higher interest rates.

"We just have a bunch of different uncertainties, and that raises the fear factor all around," said Jerry Braakman, chief investment officer of First American Trust.

Analysts have been weighing whether the recent selloff heralds the end of a prolonged period of strength in the U.S. or is simply a temporary adjustment.

While some investors expect another steady quarter of earnings growth to help the market stabilize, others are worried about pockets of weakness and that revenue gains might be peaking.

Downbeat sales targets from Texas Instruments dragged down shares of companies that make computer chips, leading to declines across the broader technology sector. Texas Instruments, Nvidia and Advanced Micro Devices all fell at least 4%, and the S&P 500 information technology group dropped 2.1%.

Fast-growing internet and technology firms have been among the hardest hit by the recent bout of market turbulence, with some analysts wondering if their outsize sales increases can continue.

AT&T was also an S&P 500 laggard, dropping 6% as the telecommunications company continued to suffer losses of traditional pay-TV customers. Shares of Netflix also tumbled, declining 6.6%. The streaming company has erased the initial advance last week that followed its latest earnings report.

In other sectors, United Parcel Service shares fell 3.8% following a quarterly sales miss from the package-delivery company.

Shares of aerospace giant Boeing rose 3.3%, helping the Dow industrials after it said its business is booming, thanks to strong demand for commercial jets and new defense projects. Still, the S&P 500 industrials sector declined 1.8%, after it was battered Tuesday following weak earnings from Caterpillar and 3M.

A number of companies are scheduled to post quarterly results after the market closes Wednesday, including Microsoft, Ford, Visa and Tesla.

Some executives have raised tighter financial conditions and higher input costs as challenges moving forward, with the Federal Reserve expected to continue to gradually boosting interest rates.

On Wednesday, the yield on the benchmark 10-year U.S. Treasury yield fell to 3.124%, according to Tradeweb, from 3.166%. Bond yields fall as prices rise and have pulled back recently with some investors seeking safety in Treasurys. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, added 0.3%.

President Trump blasted Fed Chairman Jerome Powell in an interview with The Wall Street Journal Tuesday, saying the head of the central bank threatened growth and appeared to enjoy raising interest rates.

But tightening monetary policy alone doesn't explain the recent market tremors, said Robin Creswell, managing principal at Payden & Rygel, who pointed to geopolitical tensions as another source of angst.

"What is complicating the picture is a range of extraneous factors," Mr. Creswell said. "Those are much more difficult to price, so in the short term the market will react more to those short-term stimuli."

Investors are waiting to see if the U.S. and China can resolve their monthslong tariff fight ahead of planned meetings between leaders from the world's two largest economies next month.

Even if the two sides compromise, some analysts see challenges to the global economy ahead.

Weakness in the housing and auto markets have unnerved investors bracing for a pullback in the U.S., where growth has surged this year. Sales of new homes in the U.S. fell for the fourth month in a row in September, the Commerce Department said Wednesday.

Preliminary eurozone purchasing managers index data on Wednesday suggested the regional economy grew at its slowest pace in over two years in October. The figure dropped to 52.7 from 54.1 last month. That is the lowest level since September 2016.

The Stoxx Europe 600 erased early gains Wednesday, closing down 0.2% in a sixth consecutive session of declines.

In Asia, Japan's Nikkei Stock Average rose 0.4%, while South Korea's Kospi benchmark and Hong Kong's Hang Seng fell 0.4%.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

October 24, 2018 14:14 ET (18:14 GMT)

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