US stocks hammered again, with 600-point loss erasing the Dow’s gains for 2018
- Mixed corporate earnings and weak housing data fuelled anxiety that rising prices will crimp economic growth
- The Dow tumbled 608 points, and the Nasdaq Composite lapsed into a correction from its record closing high in August
The sell-off in US stocks accelerated on Wednesday, wiping out gains for the year in both the S&P 500 Index and the Dow Jones Industrial Average, as mixed corporate earnings and weak housing data fuelled anxiety that rising prices will crimp economic growth.
Treasuries rallied for a second day on demand for haven assets.
Disappointing earnings from AT&T and Texas Instruments drove declines in the communications and semiconductor groups, offsetting a promising outlook from Boeing.
The Dow tumbled 608 points, and the Nasdaq Composite lapsed into a correction from its record closing high in August. The S&P extended its October rout to 8.8 per cent, making it the worst month since February 2009.
On Wednesday, the S&P 500 dropped 3.1 per cent, while the Dow Jones Industrial Average slumped 2.4 per cent and the Nasdaq Composite Index tumbled 4.4 per cent.
Amid the flood of earnings that will bring reports from Alphabet, Intel and Amazon.com on Thursday, economic data continues to underwhelm, particularly on the rate-sensitive housing front.
New home sales sank again, sending battered home builders lower. Fragile market sentiment is also working through reports that potential bombs were sent to Hillary Clinton and Barack Obama and the New York headquarters of CNN.
“There’s just right now a heightened sensitivity to what can go wrong,” said Kate Warne, investment strategist at Edward Jones. “So we will have more of these days where stocks move a lot within the day as everyone’s trying to sort through what do today’s reports mean.”
European politics were also in focus, with Italian Prime Minister Giuseppe Conte doubling down on his government’s budget and UK Prime Minister Theresa May’s cabinet descending into conflict.
The pound weakened, and the region’s bonds rallied. The euro dropped following disappointing manufacturing data.
“Right now markets are still trying to reprice,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. “What’s happening with earnings is exaggerating market moves.”