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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...

Posted: Nov 21, 2018 9:19 AM
Updated: Nov 21, 2018 9:19 AM

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.

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Tech 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 the second time in a week.

All three major indexes have given up their gains on the year. The Dow is nearly 2,500 points off its peak.

"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.

The 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.

The 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 driven by tariffs, the fading impact of the tax cuts and higher borrowing costs caused by the Federal Reserve.

"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.

President Donald Trump said on Tuesday that the US economy is "doing great," but he urged the Federal Reserve to keep interest rates low.

"I think we have much more of a Fed problem than we do with anyone else," Trump told reporters.

Investors 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 (AAPL). Other momentum stocks like Netflix (NFLX) and Amazon (AMZN) closed lower again. Google owner Alphabet (GOOGL) closed on Monday in its first bear market since 2011.

All told, the collective market value of Facebook, Amazon, Netflix, Alphabet, Apple and Microsoft has declined by more than $1.1 trillion.

Morgan Stanley warned on Monday that the US stock market is already in a bear market. The firm noted that more than 40% of the S&P 500 is down 20% from recent highs.

"The market is speaking loudly that bad news is coming," Morgan Stanley equity strategist Michael Wilson wrote to clients.

Slowdown fears were front-and-center in the retail sector. Disappointing results sent Target and Kohl's more than 9% lower on Tuesday. TJX Companies (TJX) and Ross Stores also retreated. Home improvement retailer Lowe's (LOW) lost 6% after posting results. The home improvement retailer has declined nine straight days.

Energy stocks were among the biggest losers. ExxonMobil (XOM), Chevron (CVX) and Hess (HES) all lost ground after US oil prices plummeted 7% to a 13-month low of $53.43 a barrel. Fears of a supply glut and weaker demand have knocked crude into a bear market. It's now down 30% from the recent high on October 3.

But some believe the market mayhem is overdone.

"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."

Kelly 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.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 289303

Reported Deaths: 3434
CountyCasesDeaths
Hennepin616511100
Ramsey25903487
Anoka20522218
Dakota20096183
Washington13066109
Stearns1291098
St. Louis7935101
Scott782754
Wright702436
Olmsted626134
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Carver432213
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Rice386033
Kandiyohi373819
Crow Wing334631
Nobles298729
Chisago29358
Otter Tail282818
Benton278642
Winona258128
Mower241323
Douglas237631
Polk234423
Morrison219524
Lyon201911
McLeod195610
Beltrami194615
Becker187512
Goodhue185727
Steele17826
Itasca176124
Isanti174316
Todd171612
Carlton165710
Nicollet150823
Freeborn14465
Mille Lacs141630
Le Sueur138110
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Cass12849
Brown125011
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Pope4990
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Iowa Coronavirus Cases

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Cases: 222064

Reported Deaths: 2319
CountyCasesDeaths
Polk33019331
Linn13877164
Scott1085683
Black Hawk10730134
Woodbury10159121
Johnson935536
Dubuque907691
Story669721
Dallas624657
Pottawattamie612469
Sioux364625
Webster353033
Marshall343545
Cerro Gordo342644
Clinton319839
Buena Vista300014
Des Moines281719
Muscatine280968
Warren274011
Plymouth268941
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Jasper212443
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Benton166217
Tama152240
Jackson142113
Delaware140221
Washington137414
Dickinson134210
Boone134011
Mahaska125327
Wright12156
Buchanan115010
Clay11314
Hardin113010
Page11134
Hamilton10809
Clayton10715
Harrison106129
Cedar104913
Calhoun10487
Kossuth10236
Floyd102216
Mills10177
Fayette10159
Lyon10058
Poweshiek97913
Butler9746
Winneshiek95412
Iowa92312
Winnebago90223
Hancock8497
Louisa83916
Grundy83811
Chickasaw8354
Sac8297
Cherokee8134
Cass79721
Appanoose77310
Mitchell7704
Allamakee76811
Union7546
Humboldt7525
Shelby75010
Emmet74724
Guthrie73715
Franklin72921
Jefferson6852
Madison6734
Palo Alto6454
Unassigned6320
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Howard5419
Greene5160
Osceola5131
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