SEVERE WX : Air Quality Alert - Special Weather Statement View Alerts

Brutal month for tech stocks

Big tech stocks are plunging as earnings growth has slowed. The China trade situation and the strong US dollar are both having an impact.

Posted: Nov 1, 2018 5:22 AM
Updated: Nov 1, 2018 5:38 AM

October was a frightening month for investors around the world.

From Hong Kong to New York, stock markets were slammed by a wave of fears about slowing growth, trade wars and higher interest rates.

The Nasdaq took the brunt of the damage. Investors fled from former tech darlings like Amazon (AMZN) and Netflix (NFLX), which both lost around one-fifth of their value.

Even though markets are enjoying a sweet Halloween rebound on Wednesday, the Nasdaq still tumbled 9% in October. That's the biggest monthly drop for the Nasdaq since November 2008.

"A financial nor'easter blew through global stock markets in October," David Kelly, chief global strategist at JPMorgan Funds, wrote to clients.

The broader S&P 500 lost nearly 7% in October, its worst month since September 2011. And despite the Dow's 241-point rally on Wednesday, the index shed 1,300 points, or 5% this month. That hasn't happened since January 2016.

"The market is damaged. Sometimes it takes time to get the damage undone," said Michael Block, market strategist at Third Seven Advisors, a private wealth management firm.

The pain spread to overseas markets, which were already slumping because of weaker economic growth and concerns about trade and politics.

Hong Kong's Hang Seng tumbled 10%. China's Shanghai Composite lost 8% in October, sinking deeper into a bear market. Italy's benchmark, dogged by political headaches, shed 8% as well. The MSCI EAFE, an index of stocks in 21 developed markets excluding the United States and Canada, dropped 9%.

As good as it gets?

Blame for the market turmoil is rampant. President Donald Trump and administration officials have suggested it's all about fear the Democrats will retake Congress. But few market analysts cite the midterm election as a primary driver.

Instead, investors worry that US economic and profit growth may have peaked. They're wondering: Is this as good as it gets? And if so, are stocks valued too richly? Is the Federal Reserve raising rates more quickly than the economy can handle?

"You've had what feels like peak growth rates and peak consumer confidence," said Matt Forester, chief investment officer at BNY Mellon's Lockwood Advisors.

Alarming profit warnings from industrial bellwethers like 3M (MMM) and Caterpillar (CAT) spooked investors. Amazon's revenue miss and cautious outlook added to concern that momentum stocks are too expensive.

"The global synchronized recovery has morphed into a global slowdown," said Forester.

In early October, the IMF downgraded its 2019 outlook for both the United States and China. The IMF cited the deepening trade war between the world's two largest economies.

Even the oil market has been infected by the growth fears. US oil prices have plunged 11% in October, while Brent crude dropped 9%. That's the worst month for both since July 2016.

"There is no getting around the fact that the global economy is slowing," Ed Yardeni, president of investment advisory Yardeni Research, wrote to clients on Wednesday.

Bear market fears

Some fear this is the beginning of the end of the longest bull market in American history. They point to pain felt by higher interest rates, especially in the real estate and auto markets.

The end of the decade-long era of easy money from central banks is causing liquidity in global markets to vanish, according to Morgan Stanley equity strategist Michael Wilson. That trend has set off a series of rolling bear markets around the world that finally infected US stocks.

"It looks to us like this rolling bear is quickly turning into a cyclical bear," Wilson wrote to clients on Monday.

The S&P 500 is nearly 8% below its all-time high. It would need to plunge much further to hit the 20% threshold considered a bear market.

Wilson argued this would be a short-term market downturn, known as a "cyclical" bear market. He said it would occur within a "secular" bull market, or one that lasts for a long period of time.

Many others believe the market is experiencing a healthy correction after becoming overheated. The US economy is still enjoying brisk growth and Corporate America is making gobs of money, even if it's at a slower pace.

If they're right, the October scare could be a repeat of the January-February market plunge. US stocks plummeted (recall the twin 1,000-point drops for the Dow) before eventually recovering to set new record highs.

"We're not there yet," Block said when asked about a bear market. "We are seeing a lot of excess. Maybe we needed a month like October to take some of the air out."

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 612001

Reported Deaths: 7756
CountyCasesDeaths
Hennepin1269201801
Ramsey53281911
Dakota47414477
Anoka43426465
Washington27780296
Stearns22738227
St. Louis18329319
Scott17747139
Wright16603153
Olmsted13567103
Sherburne1217096
Carver1078349
Clay830492
Rice8283112
Blue Earth772444
Crow Wing691299
Kandiyohi672285
Chisago629355
Otter Tail591987
Benton587798
Goodhue487274
Douglas480381
Mower478634
Winona465452
Itasca463768
Isanti447267
McLeod435861
Morrison429262
Beltrami411563
Nobles410950
Steele401619
Polk391272
Becker389957
Lyon366154
Carlton357158
Freeborn353134
Pine338123
Nicollet335045
Mille Lacs315756
Brown309140
Le Sueur301028
Todd289233
Cass288933
Meeker267344
Waseca241723
Martin237433
Roseau212721
Wabasha20873
Hubbard198741
Dodge19133
Renville184246
Redwood178741
Houston176016
Cottonwood168224
Wadena165223
Fillmore160110
Faribault157420
Chippewa154238
Pennington154120
Kanabec148028
Sibley147410
Aitkin140037
Watonwan13629
Rock129719
Jackson123112
Pipestone117226
Yellow Medicine115620
Pope11416
Swift107718
Murray107610
Koochiching96819
Stevens92611
Clearwater89517
Marshall89017
Lake85020
Wilkin84213
Lac qui Parle76222
Big Stone6114
Grant5958
Lincoln5863
Mahnomen5669
Norman5509
Kittson49222
Unassigned48393
Red Lake4037
Traverse3835
Lake of the Woods3504
Cook1740

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 376815

Reported Deaths: 6122
CountyCasesDeaths
Polk59215646
Linn21567342
Scott20530250
Black Hawk16850320
Woodbury15378230
Johnson1479586
Dubuque13627215
Dallas1150699
Pottawattamie11393177
Story1092548
Warren594392
Clinton565894
Cerro Gordo564898
Webster546397
Sioux520574
Muscatine4956106
Marshall493679
Des Moines481776
Jasper454273
Wapello4402124
Buena Vista432340
Plymouth405782
Lee396958
Marion372378
Henry301737
Jones301357
Bremer294663
Carroll287252
Boone273735
Crawford273541
Benton264255
Washington261051
Dickinson251145
Mahaska235151
Jackson225943
Kossuth222166
Clay217927
Tama213872
Delaware213343
Winneshiek201337
Buchanan197834
Page195722
Cedar194323
Hardin192544
Wright191240
Hamilton189251
Fayette188943
Harrison182873
Clayton173258
Butler169135
Madison168019
Floyd165242
Mills164724
Cherokee162238
Lyon161241
Poweshiek159836
Allamakee156452
Hancock154034
Iowa149124
Winnebago147031
Calhoun144813
Cass142155
Grundy139733
Emmet137341
Jefferson135535
Sac133320
Shelby132238
Louisa130749
Union129535
Franklin129223
Appanoose128749
Mitchell127343
Chickasaw126017
Humboldt126026
Guthrie125332
Palo Alto115224
Montgomery106938
Howard105522
Clarke102624
Monroe101533
Keokuk100432
Ida93735
Adair90132
Davis88525
Pocahontas87022
Monona86731
Greene80011
Osceola79517
Lucas78323
Worth7648
Taylor67112
Decatur6649
Fremont64910
Van Buren57318
Ringgold57124
Wayne56623
Audubon53613
Adams3504
Unassigned80
Rochester
Cloudy
59° wxIcon
Hi: 80° Lo: 60°
Feels Like: 59°
Mason City
Cloudy
63° wxIcon
Hi: 82° Lo: 62°
Feels Like: 63°
Albert Lea
Partly Cloudy
° wxIcon
Hi: 81° Lo: 62°
Feels Like: °
Austin
Cloudy
59° wxIcon
Hi: 81° Lo: 60°
Feels Like: 59°
Charles City
Cloudy
64° wxIcon
Hi: 81° Lo: 64°
Feels Like: 64°
Drier conditions for the weekend
KIMT Radar
KIMT Eye in the sky

Community Events