Published: Mon, October 29, 2018
Markets | By Terence Owen

Stocks Slammed! Dow Plunges More Than 600 Points

Stocks Slammed! Dow Plunges More Than 600 Points

Declining issues outnumbered advancers for a 3.95-to-1 ratio on the NYSE and a 2.82-to-1 ratio on the Nasdaq.

Makoto Sengoku, market analyst at Tokai Tokyo Research Institute, said: "This mess of bad factors has made it hard for markets to seize a chance to turn up".

Nasdaq futures (NQcv1) fell 0.8 percent and S&P futures (EScv1) lost 0.5 percent, suggesting the US stock market may see more selling when it opens on Friday. The average had been down more than 540 points.

In New York trading overnight, the Nasdaq composite with its hefty roster of tech stocks bore the brunt of the sell-off, falling more than 10 per cent below its August peak, what Wall Street calls a "correction". S&P 500 companies delivered second-quarter earnings growth of 25.2 per cent, well ahead of forecasts. But Asian markets took big losses, as the US market did the day before.

Disappointing quarterly results and outlooks are stoking investors' jitters over future growth in corporate profits.

Rising rates and the trade dispute could both impair economic growth, and some encouraging economic news helped stabilize markets.

Investors are disappointed by United States corporate earnings. The Russell 2000 index of smaller-company stocks gave up 39 points, or 2.6 percent, to 1,487. The Chinese yuan fell to 6.9641 against the greenback, flirting with its weakest point in almost a decade.

The Nasdaq dropped almost 2 percent, sharply cutting its gains for the year and moving deeper into correction territory, while the blue-chip Dow shed 1.1 percent and the benchmark S&P fell 1.56 percent, putting under threat their slim gains for the year. Japanese telecoms and energy giant Softbank lost 4.4 percent.

AP reported that more than 100 S&P 500 companies are expected to report strong third quarter results this week, and every sector except communications services is expected to show growth.

Shares of Caterpillar tumbled 7.6 percent after the heavy-equipment maker maintained its 2018 earnings forecast, following forecast increases in the previous two quarters.

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The beaten-down S&P technology sector retreated another 4.4 percent. Their chief concern is that USA and global economic growth has hit its high-water mark for the current business cycle and is already starting to weaken.

Despite the tumbling stock prices, the US economy looks solid. Bond prices rose, sending yields lower, as investors sought out safer investments.

In other trading, benchmark USA crude lost 71 cents to $66.11 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the benchmark for worldwide oil prices, rose 0.9 percent to $76.89 a barrel.

Gold rose 0.1 percent to $1,232.40 an ounce.

That reignited worries over the impact of rising borrowing costs, wages and tariffs on corporate profits and caused S&P industrial stocks to slide 2.24 percent.

CURRENCIES: The dollar strengthened to 112.51 yen from 112.47 yen on Tuesday. The fall came after the online retailer and cloud computing heavyweight reported that its quarterly net sales rose to $56.58 billion from $43.74 billion a year earlier. It's fallen 13.5 percent since the end of August and is down 2 percent so far this year.

"Market technicals are showing signs of improving, with fewer stocks reaching 4-week lows yesterday and weak market depth of trading activity likely close to a bottom", Draho added.

The Commerce Department said sales of new US homes plunged 5.5 percent in September, the fourth monthly drop.

Texas Instruments dropped 8.2 percent, helping pull the Philadelphia Semiconductor index down 6.6 percent in its biggest daily percentage drop since October 2014. Australia's S&P/ASX 200 was flat.

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