Slumping Stock Market Enters Negative Territory for the Year

October 24, 2018

Stocks dropped yet again on Wednesday, as the S.&P. 500 gave up its gains for 2018.

By Matt Phillips

The Trading Day

Stocks fell for the sixth consecutive session

The stock market stumbled yet again on Wednesday, as the benchmark Standard & Poor’s 500-stock index shed more than 3 percent despite solid earnings reports from companies like Boeing and Altria. Declines in the tech sector generated significant pressure.

The Big Picture

Stocks have fallen steadily for nearly three weeks

As recently as Sept. 20, investors were sitting on a respectable 9.6 percent gain for the year. Not anymore.

A panoply of concerns — like rising interest rates, uncertainty over the impact of the trade war with China and worries that the nearly 10-year bull market may be ending — set off a binge of selling.

Stocks have fallen for 13 of the past 15 trading days, including a 3.3 percent drop on Oct. 10 that was the market’s worst fall in eight months. The S.&P. 500 is now down more than 0.6 percent for the year.

The Chart

The S.&P. 500

The sell-off arrived despite an economy that looks otherwise strong: Unemployment is as low as it has been in nearly a half-century and the economy expanded at a 4 percent pace in the second quarter. Earnings results from the third quarter have done little to change the dour mood, as investors have looked past largely strong results in search of any evidence that could threaten the market’s nearly decade-long rally.

“It was kind of a market that was looking for a reason to have some money come out of it,” said Tony Dwyer, chief market strategist with the brokerage firm Canaccord Genuity in New York. “And it found it.”

The S.&P. 500 communications services sector — which includes tech giants like Google and Facebook — led the broad market lower.

  • The tech-heavy Nasdaq composite index dropped more than 4.4 percent, as shares in the tech heavyweights Amazon, Microsoft and Facebook all fell more than 5 percent.
  • Netflix stock fell more than 9 percent, after media reports said that Apple planned to announce a subscription television service that would go head-to-head with Amazon and Netflix.
  • Homebuilding stocks slumped again. The S.&P. 500 homebuilding index dropped 3 percent after new economic data showed home sales slumped for the fourth straight month. The sector has been battered this year, falling more than 36 percent, as rising mortgage rates showed signs of slowing the sector.

Investors will be looking to the release of earnings results from technology companies in the coming days for signs that these giants are still generating enormous profits.

Facebook’s report, set for Oct. 30, will be of intense interest after its report last quarter sent its stock price diving, erasing more than $100 billion in shareholder wealth.