Like so many other days that have preceded it, this was yet another day when the market got started with a bang – the Dow up 400 points in the morning, only then to get barraged by negative headlines that once again sent everyone to the exits with the Dow dropping 800 points through the session to close down 414, most of these losses in the final hour.  The final hour of panic was triggered by White House comments that a China deal may not be reached after all.  But there were other panic inducing headlines including Trump making it clear there would be a government shutdown at midnight AND that it would probably last a long time. 

So as of today, the Nasdaq is down 22 percent, the S&P has seen its greatest December decline since the Great Depression and its lowest level in 18 months and the Dow is at its lowest since a year ago October now down just over 16 percent from its October high this year.  The FAANG group, as analysts have been warning us for a long time now, bore the brunt of the sell off.  If there is any good news today it is that a large part of the selling was the “quadruple-witching effect,” which means a lot of doubling and more doubling down so today’s numbers really cannot be trusted.  And for the optimists in the crowd it is worth noting that we are nowhere near the same conditions as after the October 1929 crash.  Then the fundamentals were terrible, now they’re very solid.  There’s also a third reminder that this same exact same thing happened in the government shutdown of July 2011 when the market lost 20 percent in two weeks.  And we handily recovered from that one.  But we’re still waiting for the gurus to chime in whether it’s “buy” time or “sell” time.  My bet is that it will be the former.  Volume was huge at just over 15 billion shares traded, but again this is the quadruple-witching so the number cannot be trusted.  With the holiday though, it may be another couple weeks before normal trading resumes and we get a clearer picture. 

fri  DECEMBER 21, 2018 / 4:55 pm

Nasdaq confirms bear market; economic worries sink Wall Street

April Joyner

DJ:  22,445.37  -414.23        NAS:  6,333.00  -195.41         S&P:  2,416.62  -50.80      12/21

NEW YORK (Reuters) - Wall Street stocks fell sharply in volatile trading on Friday, with the Nasdaq confirming it is in a bear market, as concerns of slowing economic growth led investors to flee stocks in high-valuation sectors such as technology and communication services.  The major U.S. stocks indexes accelerated declines in the last hour of trading after White House trade adviser Peter Navarro said the United States and China might not reach a trade deal at the close of a 90-day negotiating window unless Beijing can agree to a profound overhaul of its economic policies.

With Friday’s losses, the Nasdaq has fallen nearly 22 percent from its Aug. 29 high. The tech-heavy index dropped to its lowest level since August 2017.  The benchmark S&P 500 index, already on pace for its biggest percentage decline in December since the Great Depression, hit its lowest level since July 2017. It is now down 17.5 percent from its closing high on Sept. 20. The Dow Industrials fell to its lowest level since October 2017 and has declined 16.3 percent from its Oct. 3 closing high.  The mid-cap S&P 400 also confirmed it is in a bear market.

Navarro’s comments added to already-mounting concerns over political uncertainty and the possibility of a slowdown in economic growth.  “That’s definitely a weight on the market,” said Shannon Saccocia, chief investment officer at Boston Private, of Navarro’s comments. “For investors, there’s a heck of a lot of small storms to be sailing ships through.”

The increasing likelihood of a partial government shutdown injected further pessimism into U.S. stock markets. President Donald Trump said there was a very good chance a government funding bill, which includes funding for a wall along the Mexico border, would not pass the Senate.  The looming shutdown threat, along with Navarro’s comments, overshadowed remarks from New York Fed President John Williams that the Fed was open to reassessing its views, which provided a fleeting boost to the markets.

Technology and communication services stocks bore the brunt of the sell-off, falling 3.0 percent and 3.1 percent, respectively.  The FAANG group of momentum stocks fared poorly. Facebook Inc shares tumbled 6.3 percent, Amazon.com Inc shares slid 5.7 percent and Netflix Inc shares sank 5.4 percent. Shares of both Apple Inc and Google parent Alphabet Inc dropped more than 3 percent.

The Dow Jones Industrial Average fell 414.23 points, or 1.81 percent, to 22,445.37, the S&P 500 lost 50.80 points, or 2.06 percent, to 2,416.62 and the Nasdaq Composite dropped 195.41 points, or 2.99 percent, to 6,333.00.  For the week, the S&P 500 fell 7.05 percent, the Dow dropped 6.87 percent, and the Nasdaq declined 8.36 percent.

For the second day in a row, more than 2,600 New York Stock Exchange and Nasdaq-listed stocks hit 52-week lows. The day before, nearly 3,000 stocks hit their low for the year, the most in any one day since October 2008. 

Adding to volatility was “quadruple-witching,” when options on stocks and indexes as well as futures on indexes and stocks expire. Volume on U.S. exchanges was 15.18 billion shares, its highest level in nearly two-and-a-half years, compared to the 8.81 billion average over the last 20 trading days.

Among Wall Street’s advancers were shares of Nike Inc, which jumped 7.2 percent after the company’s quarterly results beat Wall Street estimates.  Declining issues outnumbered advancing ones on the NYSE by a 3.57-to-1 ratio; on Nasdaq, a 3.77-to-1 ratio favored decliners.  The S&P 500 posted no new 52-week highs and 174 new lows; the Nasdaq Composite recorded five new highs and 857 new lows.