cloudy
Monday December 10th, 2018 8:09AM

Dow industrials sink 831 points as tech companies plunge

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — U.S. stocks plunged Wednesday as investors, fearful that rising interest rates and trade tensions could hurt company profits, ramped up their selling of high-flying technology and internet stocks. The Dow Jones Industrial Average fell 831 points, its worst loss in eight months.

The losses were widespread, and stocks that have been the biggest winners on the market suffered steep declines. Apple and Amazon, the two most valuable companies in the S&P 500, each had their worst day in two and a half years.

The Nasdaq composite, which has a high concentration of technology companies, sustained its biggest loss in more than two years and has dropped almost 8 percent since the start of October.

Wednesday's drop should be placed in perspective. Since early 2009, the S&P 500 has quadrupled, driven higher by the U.S. economic expansion, hefty profits for corporations and historically low interest rates, all of which makes stocks an attractive investment.

Stocks have slumped over the last week, largely due to worries over rising interest rates. The Federal Reserve recently raised short-term interest rates for the third time this year. Strong economic data and a positive outlook from Fed officials last week sent bond yields sharply higher and sparked concerns about even higher interest rates.

Big moves in interest rates tend to unsettle investors, and they can also push them to sell stocks and buy bonds instead. And there is still an overhang from the U.S. trade dispute with China, which accounts for sizeable portions of some tech companies' revenue.

Alec Young, managing director of global markets research at FTSE Russell, said investors fear that rising interest rates and growing expenses are going to erode the boost company profits have gotten from the GOP tax overhaul.

"The tax cuts juiced earnings this year and that's not sustainable," he said. "The market's starting to say that the glass may be half empty."

President Trump reiterated those concerns Wednesday. Trump told reporters after landing in Erie, Pennsylvania, for a campaign rally that he believes the Fed "is making a mistake" with its campaign of rate increases.

"I think the Fed has gone crazy," he said.

At the same time, Trump called Wednesday's market plunge "a correction we've been waiting for for a long time."

The Dow Jones Industrial Average gave up 831.83 points, or 3.1 percent, to 25,598.74. The S&P 500 index sank 94.66 points, or 3.3 percent, to 2,785.68. The benchmark index fell for the fifth straight day, which hadn't happened since just before the 2016 presidential election.

The Nasdaq composite, with a large contingent of tech stocks, tumbled 315.97 points, or 4.1 percent, to 7,422.05. It's fallen 7.5 percent in just five days.

The Russell 2000 index of smaller-company stocks shed 46.45 points, or 2.9 percent, to 1,575.41.

The market had enjoyed a stretch of relative calm, where even big intraday losses were erased by the end of the day. But over the past five days, the losses stuck, and on Wednesday the selling went on right to the closing bell.

Some of the big losers were stocks that have scored double-digits gains this year. Apple gave up 4.6 percent to $216.36 and Microsoft dropped 5.4 percent to $106.16. Amazon skidded 6.2 percent to $1,755.25 and Alphabet, Google's parent company, gave up 4.6 percent to $1,092.16.

Amazon has soared 50 percent this year, but has fallen 14 percent from its all-time high in early September. Alphabet has dropped 15 percent since late July.

Although the yield on the 10-year Treasury declined toward the end of the day, its jump from 3.05 percent early last week to more than 3.20 percent — a seven-year high — has spooked investors. The yield was just 2.82 percent in last August.

The Federal Reserve has been gradually raising interest rates for more than two years as the U.S. economy grows. When yields rise for that reason, it is generally good for stocks. But eventually the higher rates worry stock investors, as they tend to increase borrowing costs and cut into profit margins. They also make bonds more attractive investments.

There is some concern among investors that the Fed could overreact to the strong economy — it grew at a robust annual rate of 4.2 percent in the second quarter — and ramp up rate hikes and prematurely put the brakes on growth.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices.

Gina Martin Adams, chief equity strategist for Bloomberg Intelligence, said the stocks have become more volatile in the last few months because investors have concerns about their future profitability.

"Amazon recently announced they were increasing wages, Facebook is spending a ton on security," she said. "Semiconductors have the most exposure to China out of segments in the S&P 500."

Elsewhere, insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles an hour. Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

Sears nosedived after the Wall Street Journal reported that the struggling retailer hired an advisory firm to prepare a bankruptcy filing that could come within days. The stock fell 16.8 percent to 49 cents. It was more than $40 five years ago.

Sears has closed hundreds of stores and sold several famous brands or put them on the block as it sees more customers abandon its stores.

Luxury retailers tumbled after LVMH, the parent of Louis Vuitton, said its sales growth in China slowed. Tiffany plunged 10.2 percent to $110.38 and Ralph Lauren fell 8.4 percent to $116.96.

Stocks from emerging markets were also hard hit. Investors see many of these countries as being vulnerable to higher U.S. interest rates, which can pull away investment dollars. Brazil's Bovespa lost 2.5 percent and the Merval in Argentina sank 2.2 percent.

___

AP Business Writer Marcy Gordon in Washington contributed to this report.

____

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay

  • Associated Categories: Associated Press (AP), AP National News, AP Online National News, Top General short headlines, AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services
© Copyright 2018 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Dow industrials sink 831 points as tech companies plunge
Stocks take their worst loss in eight months as US indexes slide for the fifth day in a row, led by drops in big technology companies
7:29PM ( 29 minutes ago )
The Latest: Hurricane damage extensive in Panama City
Hurricane Michael has left extensive damage in Panama City, with broken and uprooted trees and power lines down nearly everywhere
7:27PM ( 32 minutes ago )
The Latest: Florida governor sends search and rescue teams
Florida Gov. Rick Scott says search and rescue teams are heading into the state's hardest-hit areas to help survivors of Hurricane Michael
7:27PM ( 32 minutes ago )
Associated Press (AP)
Limousine service operator charged in crash that killed 20
Police have charged a limousine service operator with criminally negligent homicide in a crash that killed 20 people; his lawyer says he isn't guilty and police 'jumped the gun'
7:00PM ( 59 minutes ago )
The Latest: Michael crosses into Georgia as Category 3 storm
The National Hurricane Center says Michael's eye has crossed from the Florida Panhandle into southwestern Georgia as a dangerous Category 3 storm, the strongest to hit that part of the state in recorded history
6:25PM ( 1 hour ago )
US increases pressure on Saudis over writer's disappearance
Trump demanded answers from Saudi Arabia about the fate of a missing Saudi writer, and lawmakers pushed for sanctions.
6:24PM ( 1 hour ago )
AP National News
All 15 Texas Catholic dioceses to name accused priests
The 15 Catholic dioceses in Texas early next year will release the names of clergy who have served in a parish since 1950 who have been "credibly accused" of sexual abuse of a minor
4:58PM ( 3 hours ago )
Coroner: Verne Troyer death suicide by alcohol intoxication
The Los Angeles County coroner says diminutive actor Verne Troyer died last April of suicide by alcohol intoxication
4:25PM ( 3 hours ago )
The Latest: Hurricane came too fast for many to evacuate
A Red Cross official says it's possible that as many as 320,000 people on Florida's Gulf Coast did not evacuate and are likely riding out the storm
4:24PM ( 3 hours ago )
AP Online National News
Fast, furious: How Michael grew into a 155 mph monster
How Hurricane Michael went from a 90 mph storm Tuesday morning to a 155 mph monster in just 33 hours
5:05PM ( 2 hours ago )
US demands answers on Saudi writer who disappeared in Turkey
President Donald Trump and members of Congress are demanding answers from Saudi Arabia about the fate of a prominent Saudi writer and government critic who disappeared after entering his country's consulate in Istanbul
4:43PM ( 3 hours ago )
Toke off! Marijuana is set to become legal across Canada
Next week, Canada becomes the largest country with a legal national marijuana market, but rollout will vary from province to province
1:17PM ( 6 hours ago )
Top General short headlines
MLB: League should get cut from casino wagers on sport
Major League Baseball is insisting to casino executives that the league should get a cut from wagers placed on the sport following the repeal of a federal ban on sports betting
7:47PM ( 16 minutes ago )
The Latest: Trump says Fed 'has gone crazy' after stock drop
President Donald Trump says the Federal Reserve "has gone crazy" after a major drop in stock prices Wednesday
5:46PM ( 2 hours ago )
Owner of truck company involved in hockey bus crash charged
The owner of a Canadian trucking company involved in the fatal hockey team bus crash that killed sixteen has been charged
5:46PM ( 2 hours ago )
AP Business
Markets Right Now: Dow sinks 800 as tech companies swoon
The Dow Jones Industrial average plunges 800 points, its worst drop in eight months, led by sharp declines in big technology stocks.
4:10PM ( 3 hours ago )
Trump signs bills to help patients stop overpaying for drugs
President Donald Trump has signed into law two bills that would allow pharmacists to tell consumers when paying cash would be cheaper than using insurance
3:28PM ( 4 hours ago )
Dow Jones industrials sink 500 points as bond yields rise
U.S. stocks are on track for their biggest loss since April as technology companies plunge and interest rates resumed their climb
2:31PM ( 5 hours ago )
AP Business - Economy
US stock indexes keep falling as rates resume their climb
U.S. stock indexes fell in early trading Wednesday as interest rates nudged higher yet
10:06AM ( 9 hours ago )
Global shares mixed in muted trading amid growth fears
Global shares are mixed in muted trading amid continuing worries about trade tensions and slowing global economic growth
7:02AM ( 13 hours ago )
Asian shares mostly rise in muted trading amid growth fears
Asian shares are mostly higher in muted trading amid continuing worries about trade tensions and slowing global economic growth
3:06AM ( 16 hours ago )
AP Business - Financial Markets
DOJ approves $69B CVS Health-Aetna merger, with conditions
The $69 billion CVS Health-Aetna deal gets the greenlight from Department of Justice
11:15AM ( 8 hours ago )
Bosnia oil refinery blast kills 1, injures 10
Explosion at a Russian-owned oil refinery in northern Bosnia has killed one worker and injured ten
7:40AM ( 12 hours ago )
In boon for farmers, Trump lifts restrictions on ethanol
Trump lifts summertime restrictions on higher blends of ethanol in gasoline to benefit farm states
9:19PM ( 22 hours ago )
AP Business - Industries
World stocks slide after IMF trims economic outlook
World stocks mixed as IMF trims economic outlook with rising interest rates, trade tensions
7:40AM ( 1 day ago )
World stocks mixed after IMF trims economic outlook
World stocks mixed as IMF trims economic outlook with rising interest rates, trade tensions
5:06AM ( 1 day ago )
Asian stocks fall after IMF downgrades economic outlook
Asian stocks retreat as IMF downgrades economic outlook
2:40AM ( 1 day ago )
AP Business - Financial Services
The Latest: Hurricane damage extensive in Panama City
Hurricane Michael has left extensive damage in Panama City, with broken and uprooted trees and power lines down nearly everywhere
7:27PM ( 36 minutes ago )
The Latest: Florida governor sends search and rescue teams
Florida Gov. Rick Scott says search and rescue teams are heading into the state's hardest-hit areas to help survivors of Hurricane Michael
7:27PM ( 36 minutes ago )
The Latest: Trump says 'Godspeed' to those in hurricane path
President Donald Trump is kicking off a rally in Erie, Pennsylvania, by telling everyone in the path of Hurricane Michael that the nation's thoughts and prayers are with them
7:21PM ( 41 minutes ago )
Latest: Judge weighs improper remarks to jury about Monsanto
A Northern California judge says a cancer patient's lawyer misled the jury and used improper hyperbole when he compared Monsanto to tobacco companies during his closing arguments
7:15PM ( 47 minutes ago )
Trump campaigns in Pennsylvania as hurricane hits Florida
President Donald Trump plans to rally Republicans in Pennsylvania as Hurricane Michael pounds Florida's Panhandle
7:04PM ( 59 minutes ago )