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Dow plunges more than 450 points, erases 2018 gains as Target and tech shares slide
PUBLISHED TUE, NOV 20 2018
The Dow Jones Industrial Average fell 476 points after dropping nearly 400 points in the previous session, while the S&P 500 plunged 1.5 percent. The Nasdaq Composite, meanwhile, dropped 1.7 percent. The Dow and Nasdaq were up 1.2 percent and 1.8 percent for 2018, respectively, entering Tuesday’s session. The S&P 500 was up 0.6 percent.
Target fell 9.5 percent after reporting weaker-than-expected earnings for the previous quarter. The company also posted lighter-than-forecast same-store sales, which is a key metric for retailers.
The decline sent the SPDR S&P Retail ETF (XRT) down 2.1 percent. Kohl’s, L Brands and Macy’s — which are also in the XRT — fell 9.1 percent, 15.3 percent and 3.2 percent, respectively.
NEW YORK, NY – NOVEMBER 13: Traders work on the floor of the New York Stock Exchange (NYSE) on November 13, 2018 a day after the Dow Jones Industrial Average fell by 600 points on concerns about profits in tech companies and consequences of a growing trade war. Spencer Platt | Getty Images News | Getty Images
“This looks like lingering worries about what triggered the October decline. That’s worries about an economic slowdown,” said Craig Callahan, president at Icon Funds. “I think these people are wrong, but they’re in control at this time.”
Stocks also fell as members of the popular “FAANG” trade — which is made up of Facebook, Amazon, Apple, Netflix and Alphabet — fell further into bear market. Amazon, Apple and Netflix all dropped at least 1.7 percent. Alphabet’s stock dipped 0.7 percent. Collectively, these stocks have lost more than $1 trillion in market value since hitting their 52-week highs.
On Monday, the FAANG members all closed down at least 20 percent from their one-year highs, pressuring the major indexes. The S&P 500 and Nasdaq dropped 1.7 percent and 3 percent, respectively, while the Dow fell 1.6 percent.
“Short term, unexpected weakness in the tech sector could have a significant impact on the global economy, adding to what already looks like a soggier macro environment,” said Dario Perkins, managing director of global macro at TS Lombard, in a note. “Additional retrenchment in the FAANGs could also undermine the broader US stock market.”
Apple has been leading the charge lower for FAANG stocks as investors worry sales for the company’s flagship product, the iPhone, will slow down. Most recently, Goldman Sachs slashed its price target on Apple on Tuesday, noting that “in addition to weakness in demand for Apple’s products in China … it also looks like the balance of price and features in the iPhone XR may not have been well-received.”
Meanwhile, Facebook is down sharply amid backlash for how the company has dealt its handling of the platform’s use by foreign entities to disrupt the 2016 U.S. election.
Boeing shares fell more than 3 percent Tuesday after the company canceled a conference call with airlines to discuss the systems on the 737 MAX model. Last month, a 737 MAX crashed and killed all 189 people on board.