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The fall of stock markets over the last three weeks has prompted investors to show their love for companies they did not know. Stable values, such as utilities, appliance manufacturers and real estate investment trusts, have performed much better than the rest of the market in recent times. (Richard Drew / AP)
Thomas Heath
Journalist and local business columnist, writing about entrepreneurs and businesses in the Washington metropolitan area
October's slump in inventories worsened Friday's losses following a massive sell-off in tech companies.
The Dow Jones Industrial Average dropped more than 500 points, or 2.1%, in morning trading.
The Nasdaq Composite, a technology at the cutting edge of technology, has lost 3.6%. The Nasdaq is experiencing its worst month in 10 years.
The S & P 500 was down 2.8%. The 11 sectors of the S & P index are down on Friday, the index experiencing its worst month since 2009. The S & P index plunged into correction territory, representing a drop from 10% from its summit.
Friday's setbacks wiped out all Dow and S & P 2018 gains for 2018 for the second time in a week.
At the start of the negotiations, chip makers Intel and Walgreens were the only stocks to show gains.
Markets have been volatile all month, with investors equating data elements such as corporate profits, tensions between the US and China, and the next mid-term key elections.
Friday, the Commerce Department announced a quarterly increase in its US gross domestic product of 3.5%, a figure higher than forecast. Wall Street has estimated that the healthy GDP growth rate is likely to slow stock declines.
Amazon.com and Google's parent company, Alphabet, announced Thursday their sharp decline Friday after the release of their results. They both reported strong earnings, but slower revenue growth.
Both companies have become windows of the economy. Amazon is the largest online retailer and Google dominates online search.
Amazon shares plunged 7% in pre-market transactions. Google shares fell nearly 4%.
The so-called FAANG shares – Facebook, Amazon, Apple, Netflix and Google – are behind much of the gains in the bull market, which is in its tenth year.
But the high-tech sector has been hit hard in recent weeks as investors have been liquidated by fears that double-digit revenue increases from FAANG will not last until 2019.
"What drives investors to raise their credit is Amazon's concern about whether the downturn is a reflection of the US consumer," said Sam Stovall, chief strategy strategist for the US. Equity Equity at CFRA.
Phillip Swagel, of the University of Maryland's School of Public Policy, sees signs that global economic growth is pushing the boundaries, even as the US economy remains relatively healthy.
"It would be nice if the rest of the world continues to grow and support us," Swagel said. "China has slowed down. Europe is fighting between Brussels and Italy. There is uncertainty about Brexit. Japan is doing well, but no one expects Japan's contribution to global growth. "
He added that one of the main obstacles to US economic growth was the uncertainty surrounding tariffs and their ability to limit business investment. Business capital spending is a major contributor to growth and employment and is a major goal of the Republican tax cut.
Many investors, however, continue to fear that the 2019 economy may not be as strong as last year.
"Faced with rising inflationary pressures, a growing number of companies are shifting their profitability expectations downward between 2018 and 2019, highlighting the negative impact of rising costs and the burgeoning tariff war," he said. said Kim Catechis, Portfolio Manager at Martin Currie, a Legg Mason affiliate.
Stovall said the markets are undergoing a correction, down 10 percent from their peaks.
"I am a big supporter of history," Stovall said. He said he expected a correction of about 14% of the S & P a few weeks ago. "This is the average since the Second World War. And that prepares us for a post-election pop, which represents a gain of 17% in the past. "
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