Dow falls 831 points as tech companies plummet
U.S. stocks plunged to their worst loss in eight months on Wednesday as technology companies continued to drop. The Dow Jones Industrial Average fell 831 points.
The losses were widespread, and stocks that have been the biggest winners on the market the last few years, including technology companies and retailers, suffered steep declines. Apple and Amazon both had their worst day in two and a half years.
The Nasdaq composite, which has a high concentration of technology companies, had its biggest loss in more than two years.
Alec Young, managing director of global markets research at FTSE Russell, said investors fear that rising interest rates and growing expenses are going to erode company profits next year.
“The tax cuts juiced earnings this year and that’s not sustainable,” he said. “The market’s starting to say that the glass may be half empty.”
The S&P 500 index sank 94.66 points, or 3.3 percent, to 2,785.68. The benchmark index fell for the fifth straight day, which hadn’t happened since just before the 2016 presidential election.
The Nasdaq composite tumbled 315.97 points, or 4.1 percent, to 7,422.05. It’s fallen 7.5 percent in just five days.
The Dow Jones Industrial Average gave up 831.83 points, or 3.1 percent, to 25,598.74. The Russell 2000 index of smaller-company stocks shed 46.45 points, or 2.9 percent, to 1,575.41.
After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged. Stocks had come close to big drops in the last few days, but each time they recovered some of their losses. That didn’t happen Wednesday as stocks fell further late in the day.
Fastenal Co. added to angst that the trade war with China is raising materials costs that will crimp profit margins. Estee Lauder and Tiffany led losses after French luxury goods maker LVMH confirmed China is enforcing customs rules more strictly as trade tensions remain high.
“The biggest thing going on in markets is you’re seeing an unwind,” Sameer Samana, a global quantitative and technical strategist for Wells Fargo Investment Institute, said by phone. “You had stocks doing really well, rates for the most part were very well-behaved. When you’ve got these risk-off moments, especially when you’re later in the cycle, there is some concern on the part of investors where it’s like, Is this the beginning of the end?”
Just days before the start of the third-quarter earnings season, signs are mounting that companies might not be able to deliver the runaway growth that’s bolstered equities so far in 2018. Investors have long fretted that the trade war would crimp profits, and now a group of companies is warning just that is happening at the same time that rising bond yields makes the cost of borrowing higher.
The Associated Press and Bloomberg News contributed.