By Mark DeCambre, MarketWatch , Chris Matthews
The National Association of Home Builder's confidence index
drops the most in four years
Stocks retreated sharply lower Monday, with shares of technology
and internet-related companies dragging the market lower. The main
equity benchmarks saw losses accelerate in morning trade after a
report showed home-builders' confidence plummeted in November.
U.S. financial markets will be closed Thursday for the
Thanksgiving Day holiday.
How did the benchmarks perform?
The tech-heavy Nasdaq Composite Index led the markets lower,
closing down 219.4 points, or 3%, to 7,028.48. The Dow Jones
Industrial Average tumbled 395.8 points, or 1.6%, to 25,017.44, and
the S&P 500 index retreated 45.5 points, or 1.7%, at
2,690.73
Last week, the Dow posted a weekly decline of 2.2%, the S&P
500 index declined by 1.6% while the Nasdaq shed 2.2%.
What drove the market?
Investor anxiety, evidenced by last week's declines, continued
Monday, following a report on home-builder confidence that showed
sector executives less upbeat than at any point in more than two
years.
See:Home builder confidence tumbles the most since 2014 as
headwinds catch up
(http://www.marketwatch.com/story/home-builder-confidence-tumbles-the-most-since-2014-as-housing-headwinds-catch-up-2018-11-19)
Trade issues have been a key driver of volatility, as investors
consider the possibility that U.S. tariff rates on a swath of
Chinese goods could rise from 10% to 25% in January, as they will
under current policy, absent a resolution. President Donald Trump
and Chinese President Xi Jinping will meet in Buenos Aires later
this month, a summit investors hope will lead to a new trade deal,
or at least the delay in tariff hikes.
Trade concerns weighed on the technology sector in particular,
as the supply chains of multinational tech firms rely heavily on
U.S.-China trade flows.
Meanwhile, investors also keyed in on other political
narratives, including Brexit and the Italian budget crisis, which
have contributed to market volatility of late. British Prime
Minister Theresa May is slated to take her plan to take the U.K.
out of the European Union to Brussels after seemingly avoiding a
leadership challenge -- at least for now.
Italian and EU officials remain in a protracted deadlock over
the Italian government's budget plans, which Brussels said run
afoul of the bloc's rules, setting up a clash between the two that
could prove disruptive to markets.
Rising interest rates continued to be of concern for investors,
as market participants have struggled to interpret comments made by
members of the Federal Reserve's interest-rate setting committee in
recent days. New York Fed president John Williams was the latest to
strike a somewhat dovish tone
(http://www.marketwatch.com/story/markets-think-powell-blinked-in-dallas-2018-11-19)
in a speech in New York City on Monday, where he said "Our goal is
to keep this expansion going for as long as possible."
What are strategists saying?
"Tech continues to be caught in the crosshairs of the triple
threat of rising interest rates, global growth fears and trade
tensions with China," Chris Zaccarelli, chief investment officer at
Independent Advisor Alliance wrote in a research note.
"Trade war concerns with China weigh on the global supply chain
for large technology companies while global growth fears worry many
that future earnings will be lower," he said.
"Today's housing data was pretty bad," Jim Smigiel, chief
investment officer of non-traditional strategies at SEI
Investments, told MarketWatch.
He attributed falling home-builder confidence to rising interest
rates, which have dampened demand for new homes. At the same time,
he doesn't see falling confidence as predicting a broad downturn in
the housing industry. "We're in an adjustment period, where
consumers are getting used to higher interest rates," he said.
"Other factors, like rising wages, low unemployment and demographic
factors will help stabilize sentiment towards the housing sector,"
in the coming months, he said.
Weakness in tech stocks was being driven by "soft guidance from
semiconductor companies" such as Nvidia and Texas Instruments, as
well as troubling reports concerning demand for Apple's latest
iterations of the iPhone, Marc Pinto portfolio manager with Janus
Henderson Investments, told MarketWatch.
"My sense is that negative sentiment is Apple-specific," he
said, but said that holiday-shopping-season numbers will help paint
a broader picture of consumer demand for tech products.
Which stocks were in focus?
Netflix Inc.'s(NFLX)stock chart formed a bearish "death cross,"
(http://www.marketwatch.com/story/netflixs-first-bearish-death-cross-chart-pattern-to-appear-in-2-years-at-the-open-2018-11-19)
as the 50-day moving average fell beneath the 200-day moving
average for the first time since October 2016. The stock fell 5.5%
Monday.
Sonos Inc. shares closed the day down 11.2%, after the company
teased a new roster of its audio products
(http://www.marketwatch.com/story/sonos-offers-teaser-for-new-line-of-products-as-shares-rocket-10-2018-11-16).
Nissan Motor Co.(NSANY)(NSANY)Chairman Carlos Ghosn was arrested
Monday in Tokyo, Japanese media reported, and Nissan said it
intended to oust Ghosn from his post
(http://www.marketwatch.com/story/nissan-to-remove-carlos-ghosn-as-chairman-citing-acts-of-misconduct-2018-11-19)
after uncovering "significant acts" of financial misconduct.
U.S.-traded shares of Nissan (NSANY) fell 5.9%, while shares of
Renault SA (RNO.FR) tumbled 8.4% in Paris. Ghosn is also chief
executive of Renault and chairman of Mitsubishi Motors Corp.
Shares of Dow component Apple Inc. (AAPL) declined 4% and were
in focus after the Wall Street Journal reported that the iPhone
maker's production woes are slamming suppliers
(http://www.marketwatch.com/story/shares-of-apple-iphone-suppliers-extend-losses-after-wsj-report-of-further-production-cuts-2018-11-19).
Last week, major iPhone suppliers including Qorvo Inc.(QRVO),
Lumentum Holdings Inc.(LITE)and Japan Display Inc.(6740.TO) lowered
financial outlooks.
Climarex Energy Co. shares fell 0.8% after the company announced
(http://www.marketwatch.com/story/resolute-energys-stock-set-to-surge-after-16-billion-buyout-deal-with-cimarex-energy-2018-11-19)
it would acquire Resolute Energy Co.(REN)in a deal valued at $1.6
billion. Resolute shares closed up 13.8%.
Shares of Spectrum Brands Holdings Inc.(SPB) fell 19% after
reporting fiscal fourth-quarter earnings and sales that missed
their targets
(http://www.marketwatch.com/story/spectrum-brands-missed-earnings-and-revenue-expectations-provides-downbeat-outlook-2018-11-19),
combined with a downbeat 2019 outlook.
JD.com's stock(JD) fell 8.4% after the Chinese retailer reported
a third-quarter revenue miss
(http://www.marketwatch.com/story/jdcoms-earnings-lifted-by-investment-gains-2018-11-19)
Monday morning.
Take-Two Interactive Software Inc. shares(TTWO) were down 7%
after a report in the New York Post suggesting that it could be
part of a three-way merger, along with CBS Corp.(CBSA)and Viacom
Inc.(VIA).
What data were in focus?
The National Association of Home Builder's monthly confidence
index fell 8 points to 60 in November
(http://www.marketwatch.com/story/home-builder-confidence-tumbles-the-most-since-2014-as-housing-headwinds-catch-up-2018-11-19),
the largest decline in more than four years, and the lowest overall
reading in more than two.
How did other markets trade?
Stocks in Asia ended the trading day
(http://www.marketwatch.com/story/asian-markets-quiet-as-us-china-trade-tensions-linger-2018-11-18)
broadly higher, with the Nikkei, Hang Seng Indexand Shanghai
Composite Indexall advancing.
In Europe, stocks closed the session lower, with the FTSE
100retreating 0.2% and the Stoxx Europe 600down 0.7%.
Crude oil began the day down but rallied to be up 1.3%, with
gold up 0.1% and the U.S. dollardown 0.3%.
(END) Dow Jones Newswires
November 19, 2018 16:27 ET (21:27 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.