Heavy selling marks end to wild week for stocks

The bull market is under siege as extreme turbulence grips Wall Street.The Dow dropped 296 points, or...

Posted: Oct 27, 2018 2:01 PM
Updated: Oct 27, 2018 2:01 PM

The bull market is under siege as extreme turbulence grips Wall Street.

The Dow dropped 296 points, or 1.2%, on Friday, capping off another wild week of steep losses and fleeting rebounds.

Amazon.com Inc

Banking, finance and investments

Business, economy and trade

Companies

Economic indicators

Economy and economic indicators

Financial markets and investing

Securities trading

Stock indexes

Stock markets

Technology

Nasdaq

Economic conditions

Economic growth

Gross domestic product

Wall Street

Bull market

The Nasdaq tumbled 2.1% as slowing revenue growth from Amazon and Alphabet unnerved investors about richly-valued tech stocks. Amazon plunged 8%, its worst day in four years.

The good news is that markets recovered from even steeper losses. The Dow had been down as many as 539 points and the Nasdaq had plunged 3.6%.

The S&P 500 briefly slipped into a correction before bouncing off the lows.

Still, it was another dreadful week on Wall Street, especially in the tech world. The Nasdaq plunged 3.8% on the week, its worst since March. The index is on track for its steepest monthly decline since November 2008.

"The sentiment in tech is remarkably poor," said Nicholas Colas, co-founder of DataTrek Research. "Technology was priced for perfection. But we live in an imperfect and increasingly unpredictable world."

Friday's turbulence is just the latest in a series of erratic moves on Wall Street. The Dow soared 401 points on Thursday, after plunging more than 600 points the day before.

The bout of volatility reflects mounting worries that the best days of the bull market and economic recovery may be over. The euphoria that carried stocks to record highs has morphed into sudden caution about the future. All of the Dow and S&P 500's gains for the year have been wiped out.

"We see this as much more likely to be a correction as opposed to a bear market," said Evan Brown, head of macro asset allocation strategy at UBS Asset Management. "It's very rare to get a bear market outside of a recession."

Amazon gets grounded

Amazon is ground zero for the intense debate between the bulls and bears.

Although Amazon reported record profit, the e-commerce juggernaut's revenue only increased by 29%. That marks a slowdown from 39% in the second quarter. The weaker-than-expected revenue and outlook underscores concerns that investors got too euphoric about highflying stocks like Amazon.

Google owner Alphabet (GOOGL) declined 2% after saying that its revenue growth slowed more than analysts anticipated.

"They've been the momentum stocks. If they go down, they drag the market with them," said JJ Kinahan, chief market strategist at TD Ameritrade.

And Snap (SNAP) plummeted as much as 17% after failing to curb an exodus of users. Snap closed down 10%.

"Just plain brutal," Paul Hickey, co-founder of Bespoke Investment Group, wrote to clients.

Not all tech results were disappointing though. Intel (INTC) recorded stellar chip sales and upgraded its outlook on Thursday. Shares of the chip giant rose 3%.

Even though major companies are minting money, their top-line results have been less impressive. About 57% of S&P 500 companies have reported revenue that beat expectations, according to Refinitiv. That's well below the one-year average of 73%.

Will economic strength last?

Markets are starting to price in slower economic and profit growth as the bull market and business cycle age. The stimulus from tax cuts will eventually fade and the Federal Reserve's interest rate hikes may also weigh on the economy. Trade wars and slowing overseas growth don't help.

In fact, the S&P 500 is now trading below where it was on December 22, 2017, the day President Donald Trump signed the tax cuts into law.

New numbers released on Friday show the US economy grew at a healthy 3.5% pace in the third quarter. The GDP growth, largely in line with expectations, represents a modest deceleration from the brisk 4.2% growth in the fourth quarter.

Colas said he's confident the bull market isn't over. Investors are merely anticipating a deceleration in profit and economic growth.

"I strongly believe this is a correction. Underlying economic fundamentals are still very good," said Colas.

West Lafayette
Clear
86° wxIcon
Hi: 87° Lo: 71°
Feels Like: 92°
Kokomo
Clear
84° wxIcon
Hi: 87° Lo: 68°
Feels Like: 90°
Rensselaer
Scattered Clouds
82° wxIcon
Hi: 86° Lo: 68°
Feels Like: 86°
Fowler
Scattered Clouds
82° wxIcon
Hi: 83° Lo: 69°
Feels Like: 86°
Williamsport
Clear
83° wxIcon
Hi: 85° Lo: 70°
Feels Like: 89°
Crawfordsville
Clear
80° wxIcon
Hi: 84° Lo: 70°
Feels Like: 83°
Frankfort
Clear
82° wxIcon
Hi: 85° Lo: 69°
Feels Like: 86°
Delphi
Scattered Clouds
83° wxIcon
Hi: 88° Lo: 69°
Feels Like: 87°
Monticello
Scattered Clouds
83° wxIcon
Hi: 89° Lo: 68°
Feels Like: 87°
Logansport
Broken Clouds
82° wxIcon
Hi: 85° Lo: 68°
Feels Like: 86°
Active Pattern Ahead
WLFI Radar
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 73287

Reported Deaths: 3036
CountyConfirmedDeaths
Marion15701725
Lake7496275
Elkhart480184
Allen3835163
St. Joseph342381
Hamilton2723104
Vanderburgh192213
Hendricks1871108
Cass17869
Johnson1741118
Porter129439
Clark120247
Tippecanoe118911
Madison94365
LaPorte89430
Howard88465
Kosciusko84712
Bartholomew78047
Marshall77422
Floyd77246
Monroe74630
Delaware71452
Dubois68712
Boone67246
Noble66329
Hancock64738
Vigo61910
Jackson5855
Warrick57930
LaGrange55710
Shelby54627
Grant52630
Dearborn49628
Morgan46734
Clinton4303
Henry37620
Wayne36810
White36110
Montgomery35221
Lawrence34227
Decatur33532
Harrison32723
Putnam2868
Miami2692
Scott26610
Daviess26420
Greene24634
Franklin24114
Jasper2342
DeKalb2304
Jennings22412
Gibson2214
Steuben2073
Ripley1997
Fayette1867
Carroll1852
Perry18412
Starke1777
Posey1700
Orange16924
Wabash1653
Fulton1642
Wells1622
Jefferson1602
Knox1510
Whitley1516
Washington1391
Tipton1379
Spencer1313
Huntington1223
Newton11810
Randolph1184
Clay1165
Sullivan1131
Adams962
Jay910
Owen871
Pulaski791
Rush764
Brown731
Fountain732
Blackford632
Ohio635
Benton610
Pike530
Parke511
Vermillion490
Switzerland460
Crawford440
Martin430
Union390
Warren221
Unassigned0202

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events