Market gains for 2018 wiped out by plunging stocks
S E E D E D C O N T E N T
The stock market slid dramatically on Tuesday after a slew of disappointing corporate earnings dragged down the Dow Jones Industrial Average and the S&P 500, erasing all gains for 2018. The Dow fell by 648 points at its session low, and closed at 24,465.
It's the worst Thanksgiving week for the Dow and the S&P since 2011, according to Dow Jones data.
Retail earnings released Tuesday hit the market hard, with Target shares falling as much as 15 percent on investor concern that the chain had cut its margins too tightly to remain competitive in the holiday season.
Lowe's also disappointed, reporting lower-than-expected same-store sales, coupled with an announcement that it is closing all stores in Mexico. Shares fell 3.6 percent and rival Home Depot also sank 2 percent.
“Although interest rates have ticked up and housing turnover has been pressured, the home improvement backdrop remains strong,” said Marvin Ellison, Lowe’s chief executive officer, on an earnings call Tuesday.
L Brands, which owns Victoria's Secret and Bath and Body Works, fell 14 percent after it announced a share restructuring. Victoria's Secret CEO Jan Singer resigned last week amid a sales slump and challenging positioning for the lingerie company in the #MeToo landscape.
A tech sector sell-off continued Tuesday, with Apple leading the fray. Tongues wagged and markets moved last week after Lumentum, one of Apple's major suppliers, reported a request to reduce shipments to an unnamed high-volume customer. Although Lumentum did not name Apple, the iPhone maker is listed as its largest customer.
Apple extended losses this week, falling by 4.5 percent on Tuesday and edging towards bear territory as investors feared consumers would not be snapping up the latest iPhones over the all-important holiday season.
FAANG stocks — and investors — had enjoyed a record summer that culminated in Apple and Amazon both becoming trillion-dollar companies. But October was more trick than treat, with Facebook, Amazon and Netflix all slumping in value as concern intensified over the impact on tech firms of the continued tit-for-tat over trade.
The downward slide continued Tuesday, with investor concerns over rising interest rates fanning the flames of extended geopolitical concerns.
CORRECTION (Nov. 20, 2018, 3:55 p.m. ET): An earlier version of this article misstated the name of a company owned by L Brands. It is Bath and Body Works, not Bed and Body Works.
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Many brick and mortars are having problems keeping their heads above water, which in turn is having an effect on rentals in malls.
Just a bump in economic growth? Or online business killing off shops. We shall see where this goes after the holidays.
Good article. I am sure we will have many different views on this. There is a lot to look at. How long can a "bull market" extend itself? This has been one of historical proportions. It started with the natural rise after coming out of a recession, in which the Federal Reserve (doing the right thing) kept interest rates extremely low for the better part of a decade. Then came the pro growth policies put in place by the Trump administration. From that plateau we all have our own list of factors that led to the Market down turn.
These are my choices: First would be the Fed's raising of interest rates - No more of that free money for investors. That means profits in the market are reinvested elsewhere. As for the key sectors mentioned in the article (the tech sector), they are parts of the economy along with Real Estate that had become a large bubble. Technology sales have peaked. Don't most people own devices like I-phone's? I think this is what is know in stock market lingo as a "correction". A correction that has been long anticipated.
I always think that prices/value cannot rise with no end in site. It is unrealistic.
Especially with tech. Things like facebook offer no real value. Companies like Apple are going to price themselves out of the market. There was a time when it would have been worth it to spend a little more yet with all the competition and comparable products around, less people are going to spend 1k when they could get something similar for more than half the price.
I never understood the rising interest rates as most companies can afford it. I understand trying to get the economy moving again yet during supposed good times, it should not have that much of an impact on major companies, especially with major tax breaks. Hell I still pay more than what it has risen to on my fixed rate mortgage.
I do believe it is part correction as imo a lot of value is over inflated.
I have to agree with Vic, this has been awhile in coming and it's here now...''A correction''....
When I log on to the brokerage it's depressing to see the 6 month or 1 year chart
so I immediately switch it to the 2 year view which includes what was basically a 12 month "melt up" which ended January 26,2018
Then I feel better...about the last tumultuous 10 months...
and the eventual corrections......
I've been moving funds into short term treasuries and just moving to cash in my brokerage account. I'm getting about 2.1 percent on 4 week Tbills. I have a Etrade brokerage account and also a bank account with Etrade that pays 1.9 percent so it is easy to move funds between the accounts. We are going to see some great opportunities to pick up stocks are bargain prices in the near future.