Dow Jones Industrial Average drops 551 points as US stocks take another battering
- The Dow dropped 2.21 per cent, with the S&P 500 and the Nasdaq also falling hard
- Oil prices fell 6 per cent as fears swirled over global growth prospects
The S&P 500 entered correction territory and the Dow Jones Industrial Average plunged more than 500 points on Tuesday, as US stocks fell hard again.
All major US averages finished trading sharply lower, and oil prices also tumbled on global growth fears.
The S&P 500 Index dropped 1.82 per cent, briefly sliding 10 per cent below its record close. The Dow Jones Industrial Average shed 551.8 points as it fell 2.21 per cent, and the Nasdaq Composite Index fell 1.7 per cent to erase its gain for the year. Trading was heavy as angst spread across global equity markets, with volume more than 40 per cent above normal for this time over the past 30 days.
Investors pointed to escalating trade tension, signs of a looming slowdown in retail growth and cracks in the credit market, but an indiscriminate dumping of the year’s biggest winners still largely characterised the action. Tech hardware manufacturers and food retailers were the worst performing groups in the S&P 500.
“It’s a fundamental-driven correction,” Mandy Xu, chief equity derivatives strategist at Credit Suisse, said on Bloomberg Television.
“People are very concerned about earnings outlooks, not just in tech but broader across all sectors. And as a result, we’re probably not going to get a V-shaped recovery. People are going to probably wait until next quarter’s earnings to see if growth is holding up.”
“It’s the market adjusting to an early 2019 that looks different from the months of 2018 in that there have been mounting concerns over global growth,” said Quincy Krosby chief market strategist at Prudential Financial. “US growth is not weakening dramatically but slowing. There’s concerns over the Federal Reserve and its rate hike trajectory.”
Oil prices also tumbled more than 6 per cent on Tuesday in heavy trading volume, with US crude diving to its lowest level in more than a year.
“There’s a lot of trade fears, a lot of mega-cap tech selling, and it’s one of those things that happens when there’s a correction,” said Dan Miller, director of equities at GW&K Investment. “I’ve seen this too many times before but there’s enough things out there that people are pointing to and it’s created a heavy level of fear.”
Additional reporting by Reuters