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Stock Market News For Oct 30, 2018

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U.S. stock markets fell sharply lower on Monday following reports of renewed tariff tensions between the United States and China. Wall Street witnessed a highly volatile session trading session as concerns about global trade and global economic growth dented investors' confidence. Moreover, technology and internet stocks, especially the FAANG group, has become vulnerable due to uncertainty about upcoming mid-term elections.

The Dow Jones Industrial Average (DJI) closed at 24,442.92, declining 1% or 245.39 points. The S&P 500 Index (INX) fell 0.7% to close at 2,641.25. The Nasdaq Composite Index (IXIC) closed at 7,050.29, shedding 1.6% or 116.9 points. A total of 9.3 billion shares were traded on Monday, higher than the last 20-session average of 8.5 billion shares. Decliners outnumbered advancers on the NYSE by 1.45-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.45-to-1 ratio. The CBOE VIX increased 2.2% to close at 24.70.

How Did the Benchmarks Perform?

The Dow ended in negative territory for the second straight day. In an extremely volatile trading session, the blue-chip index gained 352 points at its intraday high and was down 566 points at its intraday low. The swing of nearly 918 points was the index's biggest intraday reversal since Feb 7. The Dow briefly entered into correction territory but managed to escape this zone recovering some of its losses at the close. Notably, half of the 30 components of the Dow closed in the red while the other half finished in the green.

The S&P 500 also closed in the red for the second straight day. However, the benchmark index ended just shy of correction territory. The Energy Select Sector SPDR (XLE), Technology Select Sector SPDR (XLK), Industrials Select Sector SPDR (XLI) and Communication Services Select Sector SPDR (XLC) plunged 1.9%, 1.7%, 1.7% and 1.6%, respectively. Notably, six of the 11 sectors of the broader market index closed in the red while five finished in the green.

Meanwhile, the tech-laden Nasdaq Composite closed in negative territory for the second straight day due to weak performance of large technology and internet-based stocks. The tech-heavy index posted its biggest intraday reversal since Aug 25, 2015.

U.S. -- China Trade War Intensifies

On Oct 29, Bloomberg reported that United States is preparing to impose tariffs on all residual imports from China in early December, if trade related negotiations between Donald Trump and Xi Jinping fails to resolve trade conflicts. The latest round of tariffs could be worth $257 billion. Notably, the Trump administration has already imposed $250 billion tariffs on Chinese goods while China levied $110 billion of retaliatory tariffs on U.S. imports.

Consequently, trade-sensitive stocks like The Boeing Co. BA and Caterpillar Inc. CAT declined 6.6% and 0.9%, respectively. The Boeing carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Technology Stocks Pull Down Wall Street

Technology and Internet-related stocks, especially the FAANG group, suffered significantly on Monday due to several reasons. First, uncertainly related to the upcoming U.S. congressional elections have made investors skeptical as these stocks are on the verge of being subject to strict regulatory measures. Secondly, the high-growth tech sector is likely to suffer if the Fed maintains its aggressive interest rate policy. Third, a possible slowdown of global economic growth will result in fluctuating earnings of these stocks in future.

Economic Data

On Oct 29, the Department of Commerce reported that U.S. consumer spending increased $53 billion or 0.4% in September, in line with the consensus estimate, marking the seventh consecutive month of gain by this margin. Personal income rose $35.7 billion or 0.2% while the consensus estimate was for a growth of 0.4%. Personal disposable income grew $29.1 billion or 0.2%. Personal saving was $975.7 billion in September, up 6.2%.

The PCE inflation index rose 0.1% in September, even as the 12-month rate slipped to 2% from 2.2%. Core PCE inflation - the Fed's favorite gauge of inflation - rose 0.2% but its year-over-year growth rate remains flat at 2%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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