The hidden bear market: Most S&P 500 stocks are in "correction"

Fredrick Soto
October 30, 2018

AT&T was among the big decliners in the media and communications sector, dropping 8.1 per cent to United States dollars 30.36 after the communication giant's latest quarterly results fell short of Wall Street's expectations.

The tech-rich Nasdaq Composite Index jumped 209.94 points (2.95 per cent) to 7,318.34, a day after the index suffered its biggest decline in seven years.

Market experts blamed disappointing outlooks in tech company results for stoking jitters over world economic growth and future corporate profitability.

The Dow Jones Industrial Average fell 296.24 points, or 1.19 per cent, to 24,688.31, while the S&P 500 lost 46.88 points and dropped to 2,658.69, with both returning to negative territory for the year.

The SPI200 futures contract was down 94 points, or 1.62 per cent, to 5,700.0 at 0800 AEDT on Thursday, signalling another opening plunge for the local market after energy and materials shares drove it lower on Wednesday.

The Nasdaq surged 241 points, or 3.4 percent, to 7,350.

The Nasdaq fell 3.8 per cent for the week, while the Dow was down 3 per cent and the S&P 500 was down 4 per cent on the week.

The Dow Jones Industrial Average sank 500 points Friday, or 2 percent, putting it in the red for the year again.

Microsoft, whose strong results helped push the Nasdaq to its biggest daily gain since March just a day earlier, fell 1.2 percent.

The sector has lost about 10 percent in October and, if losses hold, it would be the worst month for the high-growth sector in almost 10 years. The S&P 500 plunged one-and-three-quarter percent to 2,658 sending it into corrective territory.

Benchmark U.S. crude rose 0.4 percent to settle at $67.59 a barrel in NY. The Nasdaq plummeted 11.4 percent through Wednesday. Australia's leading benchmark, ASX 200, also fell sharply during morning trading, shedding more than two percent.

Recent signs the housing market is cooling are adding to jitters over prospects for USA economic growth.

The VIX, an index called Wall Street's "fear gauge" because it measures how much volatility traders expect, recently reached its highest level since February.

It was unclear if the gains were a return to calm or only a respite from the torrent of selling on Wall Street overnight that spurred a further drop in technology-related shares in Asia. Brent crude, the benchmark for global oil prices, added 0.9 percent to close at $77.62 a barrel in London.

Toyota Motor Corp. gave up 2.7 per cent while Hong Kong-based retail supply chain giant Li & Fung Ltd. lost 1.3 per cent. But dour forecasts have pulled down fourth-quarter growth estimates to 19.4 percent from 19.9 percent, according to I/B/E/S data from Refinitiv. Silver dropped 0.8 percent to $14.68 an ounce. The fall came after the online retailer and cloud computing heavyweight reported that its quarterly net sales rose to $56.58 billion from $43.74 billion a year earlier. Copper was little changed at $2.76 a pound.

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