Stocks are skidding Tuesday as weak results from retailers and mounting losses for big technology companies push the market back into the red for the year.
Energy companies are slumping because of a 7 per cent plunge in the price of oil. Crude is on track for its biggest loss in three years. Industrial companies are also dropping as the downward momentum in stocks builds after steep losses Monday.
The S&P 500 index lost 38 points, or 1.4 per cent, to 2,652. The benchmark index has fallen 9.5 per cent from its record high two months ago.
The Dow Jones Industrial Average sank 505 points, or 2 per cent, to 24,513. It was down as much as 596 earlier.
At 1:26 p.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 198.57 points, or 1.32 per cent, at 14,872.27.
Investors lately have been quick to bail out of companies that show rising costs are eating into profits, and that was the case with retailers Tuesday. Target plunged after reporting earnings that missed Wall Street’s estimates due to higher expenses. Ross Stores, TJX and Kohl’s also fell on disappointing forecasts.
Technology companies slid after the Trump administration proposed new national security regulations that could limit exports of high-tech products in fields such as quantum computing, machine learning, object recognition and artificial intelligence.
Katie Nixon, the chief investment officer for Northern Trust Wealth Management, said investors have been selling tech stocks because of signs that trade tensions between the U.S. and China are getting worse instead of improving.
“A resolution doesn’t seem to be coming in the short term,” she said. “A lot of the companies that are front and centre (like) Alphabet, Apple, IBM ... could be significantly limited in the way they export their technology.”
Investors continued to flee the technology giants that have led the stock market higher in years past. Apple fell 3.7 per cent to $178.97 and is down 22.3 per cent from the peak it reached October 3, though it’s still up for the year. Microsoft lost 2.5 per cent to $102.07.
Tech stocks were among the biggest losers in Europe, too. Nokia and Ericsson, two top suppliers of telecom networks, each fell about 3 per cent. SAP, which provides business software and cloud computing services, was down over 1 per cent, as was chip maker Infineon Technologies.
The tech-heavy Nasdaq composite lost 87 points, or 1.2 per cent, to 6,941. The Russell 2000 index of smaller-company stocks shed 21 points, or 1.5 per cent, to 1,474.
Target skidded 10.2 per cent to $69.27 after it said its growing investments in its online business and in stores are bringing in shoppers, but are affecting its profits. Department store Kohl’s gave up 9.4 per cent to $69.36 and TJX, the parent of TJ Maxx, fell 3.8 per cent to $47.12. Discount chain Ross Stores slid 7.5 per cent to $84.38.
Benchmark U.S. crude lost 7 per cent to $53.23 a barrel in New York. Brent crude, used to price international oils, fell 6 per cent to $62.80 per barrel in London. Oil prices were little changed Monday, but they’ve nosedived since early October.
Nixon said Saudi Arabia and other countries started producing more oil after the Trump administration announced renewed sanctions on Iran. But after that increase in production, the administration granted waivers to several countries that allowed them to keep importing more oil from Iran. That crated a supply glut that pushed prices dramatically lower.
Nixon said OPEC countries will probably cut back on oil production, but some investors are worried that the buildup in crude stockpiles is a sign the global economy isn’t doing as well as expected.
Investors looked for safer options. Utility companies took only modest losses and bond prices were steady. The yield on the 10-year Treasury note remained at 3.06 per cent.
In Europe, Germany’s DAX index lost 1.6 per cent and France’s CAC 40 shed 1.2 per cent. London’s FTSE 100 retreated 0.8 per cent.
Tokyo’s Nikkei 225 lost 1.1 per cent and Hong Kong’s Hang Seng shed 2 per cent while Seoul’s Kospi retreated 0.9 per cent.
Nissan fell over 5 per cent in Asia as traders there got their first chance to react to the news that its chairman, Carlos Ghosn, who engineered a turnaround at the automaker, was arrested on charges he underreported his income and misused company funds and will be fired.
Nissan said Ghosn and another senior executive, Greg Kelly, were accused of offences discovered during an investigation set off by a whistleblower. Kelly also was arrested. The Renault-Nissan-Mitsubishi alliance sold 10.6 million cars last year, more than any other manufacturer. Renault shares dropped 8.4 per cent on Monday and another 2.5 per cent Tuesday.
Stocks sank Monday as investors focused on simmering trade tension between Washington and Beijing after the two governments clashed at a weekend conference. The two countries have raised tariffs on billions of dollars of each other’s goods in a fight over China’s technology policy.
Presidents Donald Trump and Xi Jinping are due to meet this month at a gathering of the Group of 20 major economies. Investors didn’t react much as the trade dispute ramped up, but more recently they’ve gotten concerned it will drag on and hinder global economic growth.
The dollar rose to 112.80 yen from 112.54 yen. The euro fell to $1.1370 from $1.1453.
The Associated Press and Reuters