U.S. Stocks Fall as Tech Selloff Spreads
November 20 2018 - 12:05PM
Dow Jones News
By Corrie Driebusch
U.S. stocks tumbled Tuesday, putting major U.S. indexes at risk
of closing below their October lows and wiping out yearly
gains.
What started as a technology company selloff bled into other
corners of the market, as investors dumped shares of everything
from retailers to oil-and-gas companies in favor of relatively safe
assets such as bonds and reliable dividend payers like utility
companies.
The result: Some traders who stepped in to scoop up shares in
late October, hoping for a quick rebound, are now in danger of
losing those potential profits and more. That puts the stock market
in a tenuous position, several said.
"The buy-the-dippers are getting concerned," said Justin Wiggs,
managing director in equity trading at Stifel Nicolaus. According
to his calculations, as of this morning about 16% of S&P 500
companies are now below their October lows. Those companies range
from tech giants to health-care companies to energy firms.
"Now it's just let's sell everything," he said.
In recent trading, the S&P 500 dropped 1% and the Dow Jones
Industrial Average fell 1.4%, or 333 points, both on track to close
in the red for the year, while the Nasdaq Composite declined
0.7%.
The Nasdaq closed Monday below its Oct. 29 low, while the
S&P 500 and Dow industrials briefly slipped intraday below
their October troughs on Tuesday.
The Nasdaq slumped 3% Monday, closing near a seven-month low,
with tech-giant Alphabet slipping into bear-market territory. On
Tuesday, while the tech sector declined, it was consumer companies
and energy firms leading indexes lower.
Oil-and-gas companies tumbled as the price of U.S.-traded crude
oil fell 2%, extending its one-month drop to more than 20%.
Retailers, recently on the rebound, sunk after Target Corp. said it
faced higher costs on supply chain and wages for workers. Shares
fell 9.2%.
Ryan Wibberley, chief executive of Gaithersburg, Md.-based CIC
Wealth Management, said he received a client call Monday to buy
shares of Apple Inc. He said he agreed to do so, though not without
a dose of caution.
"I'm not convinced it's over," he said of the selloff. Apple's
stock ended Monday down 4%, and it is off another 3.6% on Tuesday.
Since the start of October, the stock has tumbled more than
20%.
Though Mr. Wibberley, whose firm manages about $600 million,
said he expects major indexes to fall further. Mr. Wibberley said
he still believes in the health of the U.S. economy.
Mr. Wibberley is in good company in this belief. Analysts say
there is little evidence to support an impending recession.
Earnings are growing at a solid clip, manufacturing production grew
at a solid pace for the fifth consecutive month in October, and the
U.S. economy's growth, while slowing, is still powering ahead at a
faster pace than it notched for much of the long-running U.S.
expansion since the financial crisis.
Another reason Mr. Wibberley isn't worried about an imminent
recession is the optimism of his clients, many of whom own
businesses.
"One of my clients owns a construction company, and he says he
has more business on the books, more contracts signed, jobs to be
done, than ever before," he said. "I'm not sitting around worried
about a recession."
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
November 20, 2018 11:50 ET (16:50 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.