In a major sell-off witnessed yesterday, US stocks plunged for a second straight day on Tuesday wiping away the entire gains made by investors in 2018, as the Dow Jones Industrial Average fell 551.8 points, or 2.21 percent to 24,465.64. The S&P 500 lost 48.84 points, or 1.82 percent, to 2,641.89 and the Nasdaq Composite dropped 119.65 points, or 1.7 percent, to 6,908.82 even as energy stocks plummeted with oil prices slumping to one-year lows. What is behind such a major sell-off?
Retail stocks plunge on weak forecasts
Ahead of the Christmas season, the retailers in the United States see weak demand, dampening investor outlook in the space. Retail giant Target Corp shares slumped 10.65% after the retailer’s third-quarter profit missed analysts’ estimates as investments in its online business, higher wages and price cuts hurt margins, said a Reuters report. Department store operator Kohl’s Corp shed 9.46 percent after its full-year profit forecast fell below expectations. Warnings from retailers prompted caution ahead of the holiday season, increasing selling pressure on equities as investors fret about a slowdown in global growth, peaking corporate earnings and rising interest rates, noted the agency report.
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Tech stock rout on tepid demand outlook
Tech stock rout continued on Tuesday as investors feared weak demand demand outlook. The tech heavy Nasdaq closed at its lowest level in more than seven months after Apple shares plummeted 4.8% to its lowest level since early May, as concerns surrounding slowing demand for iPhones remained. The stock is now down 24% from its highs. Following the rout, the big five “Faang” technology stocks have wiped off more than $1 trillion since recent highs, leaving the Nasdaq heading for its worst quarterly loss since the financial meltdown witnessed in 2008.
Energy stocks tumble with global crude price
Yesterday, oil prices plunged as much as 7% snapping four days of gains and renewing a sell-off that has plunged crude futures into a bear market. Energy stocks tumbled in trade following the development. “It’s a combination of all of the various concerns coming together to force investors out of the overall market,” Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York told Reuters.