U.S. Stocks Lose Gains Amid Growth Worries, Tech Declines
November 14 2018 - 5:41PM
Dow Jones News
By Amrith Ramkumar and Georgi Kantchev
Declines in financial and technology stocks, along with
lingering worries about slowing global growth, dragged U.S. stocks
lower Wednesday in another volatile session.
Major indexes opened higher before tumbling most of the morning
and early afternoon. They hit their lowest point of the day at
about 2 p.m. in New York and then staged a sudden rally to pare
most of their decline, with little explanation. But they couldn't
hold on and slumped again in the final 30 minutes, resulting in a
565-point intraday swing for the Dow industrials.
Stocks' failure to gain momentum after a modest advance in the
wake of last week's midterm elections has made some investors
nervous that continuing anxiety about a weaker global economy and
tighter financial conditions could continue. That is why declines
in individual sectors such as technology and financials have spread
so quickly, analysts said.
"People got complacent and comfortable that the market was
rallying back, and now they're reassessing that position again,"
said Mohit Bajaj, director of ETF trading solutions at WallachBeth
Capital.
The Dow Jones Industrial Average fell 205.99 points, or 0.8%, to
25080.50, while the S&P 500 shed 20.60 points, or 0.8%, to
2701.58. The blue-chip index posted its fourth consecutive session
of declines, while the S&P 500's losing streak extended to five
sessions. The tech-heavy Nasdaq Composite slumped 64.48 points, or
0.9%, to 7136.39, after rising about 1% shortly after the opening
bell.
Slumping Treasury yields dragged down bank shares as lower
yields tend to hurt lending profitability. The S&P 500
financial sector fell 1.4%, and Bank of America and JPMorgan Chase
closed down about 2%.
Outsize declines in fast-growing internet companies also
continued to stoke broader volatility. Some analysts worry that
revenue growth for those firms is peaking, removing a key source of
support for U.S. stocks. Apple and Netflix dropped more than 2.6%,
and Microsoft and Amazon.com each fell more than 1.4%.
Some investors say recent lukewarm revenue targets from internet
companies are a sign that they aren't immune to slowing global
growth and trade tensions. Economic data in Europe and Asia added
to those concerns Wednesday.
"This question about global growth is really central to
everything that happens here," said David Kelly, chief global
strategist at J.P. Morgan Asset Management.
Germany's economy shrank for the first time in 3 1/2 years in
the third quarter, while overall eurozone annualized growth was
0.7% over the quarter, its lowest rate since 2013.
In China, business activity was mixed in October, as retail
sales grew at the slowest pace in five months, while growth in
industrial output and investment accelerated.
The data came as investors watched for the latest moves in the
trade spat between the U.S. and China. The countries have renewed
talks on trade ahead of a meeting between President Trump and
President Xi Jinping, set for the end of November at the Group of
20 nations summit in Buenos Aires.
Meanwhile, the U.K.'s Theresa May secured cabinet approval for
her Brexit deal, setting the stage for a tougher vote in Parliament
on the U.K.'s exit from the bloc and causing gyrations in the
British pound.
"There are a lot of issues out there: geopolitics, oil, trade
wars, Brexit, take your pick," said Eric Stein, co-director of
global income at Boston-based Eaton Vance. "It means more
volatility is in store for the foreseeable future."
Macy's was an S&P 500 laggard, sliding $2.57, or 7.2%, to
$33.22 following its earnings report even after it delivered
healthy sales growth in its latest quarter and raised its guidance
for the year. Investors will parse Thursday retail-sales data and
Walmart earnings for the latest reading on consumer spending ahead
of the holiday season.
The yield on the benchmark 10-year U.S. Treasury note fell to
3.120% from 3.145%. Yields fall as bond prices rise. The WSJ Dollar
Index, which tracks the dollar against a basket of 16 currencies,
was recently down 0.2%.
Those moves came after data showed consumer prices rose in
October in line with expectations, potentially easing some anxiety
about higher inflation leading to a faster pace of interest-rate
increases. But some analysts remain anxious that tariffs will also
impact inflation moving forward and the Federal Reserve's path of
rate increases.
Oil prices stabilized Wednesday, with U.S. crude up 1% to end a
record 12-session losing streak.
In Europe, the Stoxx Europe 600 fell 0.6%.
Earlier, Hong Kong's Hang Seng fell 0.5% while Japan's Nikkei
Stock Average was up 0.2%. China's benchmark Shanghai Composite
Index fell 0.9%.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and Georgi
Kantchev at georgi.kantchev@wsj.com
(END) Dow Jones Newswires
November 14, 2018 17:26 ET (22:26 GMT)
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