Why the Dow keeps sinking

The gloom-and-doom on Wall Street has wiped out the stock market’s gains for the year.

The Dow dropped 552 points, or 2.2%, on Tuesday. Plunging retailers like Target (TGT) and Kohl’s (KSS) led the S<><><><><><><><><><>&P 500 1.8% lower./ppTech stocks once again got hit hard, with the Nasdaq sinking 1.7%. Apple retreated another 5% after Goldman Sachs dimmed its price target on the iPhone maker for thea href=”http://www.cnn.com/2018/11/13/tech/apple-iphone-sales-panic/index.html” target=”_blank” second time in a week. /a/ppAll three major indexes have given up their gains on the year. The Dow is nearly 2,500 points off its peak./pp”The highways will be crowded this evening as the Thanksgiving rush will begin in earnest, but this morning investors are rushing for the exits,” Paul Hickey, co-founder of Bespoke Investment Group, wrote to clients on Tuesday./ppThe Dow lost nearly 400 points on Monday as well. This week’s sell-off marks a continuation of a glum two months on Wall Street. The S<><><><><><><><><><><><><><><><><><><><><><><><><><><><><><>P 500 is down nearly 10% from its record high, flirting with official correction territory./ppThe losses have been sparked by a flurry of concerns about everything from higher interest rates and crashing oil prices to the US-China trade war. But the overarching theme is that investors are bracing for the end of the fantastic economic and profit growth that marked the past year. Analysts expect a deceleration in 2019 a href=”http://www.cnn.com/2018/11/19/politics/us-china-washington-trade-talks/index.html” target=”_blank”driven by tariffs/a, the fading impact of the tax cuts and higher borrowing costs a href=”http://www.cnn.com/2018/11/08/business/federal-reserve-november-rate-hike/index.html” target=”_blank”caused by the Federal Reserve. /a/pp”Put simply, stocks have already started to price in the risk of an economic slowdown,” Goldman Sachs chief US equity strategist David Kostin wrote to clients on Tuesday./ppPresident Donald Trump said on Tuesday that the US economy is “doing great,” but he urged the Federal Reserve to keep interest rates low./pp”I think we have much more of a Fed problem than we do with anyone else,” Trump told reporters./ppInvestors continue to flee from the tech darlings that once carried the market higher. Worries about lackluster demand for the latest iPhones have weighed heavily on Apple (a href=”https://money.cnn.com/quote/quote.html?symb=AAPL” target=”_blank”AAPL/a). Other momentum stocks like Netflix (a href=”https://money.cnn.com/quote/quote.html?symb=NFLX” target=”_blank”NFLX/a) and Amazon (a href=”https://money.cnn.com/quote/quote.html?symb=AMZN” target=”_blank”AMZN/a) closed lower again. Google owner Alphabet (a href=”https://money.cnn.com/quote/quote.html?symb=GOOGL” target=”_blank”GOOGL/a) closed on Monday in itsa href=”http://www.cnn.com/2018/11/19/investing/google-bear-market/index.html” target=”_blank” first bear market since 2011. /a/ppAll told, the collective market value of Facebook, Amazon, Netflix, Alphabet, Apple and Microsoft has declined by more than $1.1 trillion./ppMorgan Stanley warned on Monday that the US stock market is a href=”https://www.cnn.com/2018/11/19/investing/stocks-bear-market-morgan-stanley/index.html” target=”_blank”already in a bear market. /aThe firm noted that more than 40% of the S<><><><><><><><><><><><><><><><><><><><><><><><><><><><><>P 500 is down 20% from recent highs./pp”The market is speaking loudly that bad news is coming,” Morgan Stanley equity strategist Michael Wilson wrote to clients./ppSlowdown fears were a href=”http://www.cnn.com/2018/11/20/business/target-best-buy-kohls-tjmaxx-black-friday/index.html” target=”_blank”front-and-center in the retail sector/a. Disappointing results sent Target and Kohl’s more than 9% lower on Tuesday. TJX Companies (a href=”https://money.cnn.com/quote/quote.html?symb=TJX” target=”_blank”TJX/a) and Ross Stores also retreated. Home improvement retailer Lowe’s (a href=”https://money.cnn.com/quote/quote.html?symb=LOW” target=”_blank”LOW/a) lost 6% after posting results. The home improvement retailer has declined nine straight days./ppEnergy stocks were among the biggest losers. ExxonMobil (a href=”https://money.cnn.com/quote/quote.html?symb=XOM” target=”_blank”XOM/a), Chevron (a href=”https://money.cnn.com/quote/quote.html?symb=CVX” target=”_blank”CVX/a) and Hess (a href=”https://money.cnn.com/quote/quote.html?symb=HES” target=”_blank”HES/a) all lost ground after a href=”http://www.cnn.com/2018/11/20/business/oil-prices-plunge/index.html” target=”_blank”US oil prices plummeted 7% to a 13-month low/a of $53.43 a barrel. Fears of a supply glut and a href=”http://www.cnn.com/2018/11/15/business/oil-prices-economy/index.html” target=”_blank”weaker demand/a have knocked crude into a bear market. It’s now down 30% from the recent high on October 3./ppBut some believe the market mayhem is overdone./pp”I don’t think we’re headed for a recession,” David Kelly, chief global strategist at JPMorgan told CNN Business. “The slowdown in the economy and the trouble in the market is going to stay the Fed’s hand.”/ppKelly said he thinks the Trump administration will also “pull back” from the US-China trade war if it sees that the risk is a potential recession.
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