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US: S&P 500 ends at lowest since May as tech, internet stocks tumble
[NEW YORK] The S&P 500 ended at its lowest level since early May on Friday and flirted with correction territory after technology and internet shares sold off further, capping another volatile week for US stocks.
During the session, the benchmark S&P 500 fell more than 10 per cent from its Sept 20 record closing high, but pared losses to end above that level. A finish of 10 per cent or more below its all-time closing high would confirm a correction.
The Nasdaq registered its biggest weekly drop since March 23 after confirming a correction earlier in the week.
Grim results late Thursday from Amazon.com Inc and Alphabet, two stocks that have helped power the equity markets decade-long bull run, sparked the day's selloff and overshadowed data showing the US economy continued to grow at a healthy clip.
"It's all been driven off quarter reporting," said Ernesto Ramos, portfolio manager for BMO Global Asset Management in Chicago. "When the reports are bad in technology you get a really bad day because of the elevated valuations."
Investors may see more volatility through the remainder of the US earnings season and ahead of the Nov. 6 U.S. midterm congressional elections, he and other money managers said.
"Once the elections and earnings are out of the way, we'll have a calmer market but not necessarily a big move up," Ramos said.
Google-parent Alphabet's revenue missed estimates, fanning concerns that regulatory scrutiny and competition would throttle its scorching pace of growth. The stock fell as much as 5.6 per cent before recovering to end down just 1.8 percent.
Amazon tumbled 7.8 per cent in its worst daily percentage drop since October 2014, after it missed quarterly sales estimates and gave a below par holiday-season sales forecast.
The Dow Jones Industrial Average fell 296.24 points, or 1.19 per cent, to 24,688.31, the S&P 500 lost 46.88 points, or 1.73 per cent, to 2,658.69 the Nasdaq Composite dropped 151.12 points, or 2.07 per cent, to 7,167.21.
The Dow and the S&P 500 both returned to negative territory for the year.
The Nasdaq fell 3.8 per cent for the week, while the Dow was down three per cent and the S&P 500 was down four per cent on the week.
While economic growth is mostly healthy, disappointing corporate results and forecasts this earnings season have shown how tariffs, rising wages and borrowing costs as well as jitters over geopolitical events are hurting companies.
Data earlier in the day showed the US economy continued to grow at a healthy pace, offering some support.
US gross domestic product growth slowed less than expected in the third quarter as a tariff-related drop in soybean exports was partially offset by the strongest consumer spending in nearly four years and a surge in inventory investment.
The Cboe Volatility Index, the most widely followed gauge of expected near-term gyrations for the S&P 500, finished little changed at 24.16.
Market participants say a healthy level of hedging activity going into the sell-off and the recent upward bid for Treasury prices explains the volatility index's relative calm.
Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis, said while he expects further downside in stocks, many investors still appear to be looking for chances to buy.
"Most people I would argue are sitting around talking about where do we buy. They look at this still more as a buying opportunity than a risk," he said.
Facebook Inc, Apple Inc and Netflix Inc, the other members of the so-called FAANG group, were also sharply lower. The S&P discretionary index fell 3.6 per cent.
Declining issues outnumbered advancing ones on the NYSE by a 2.68-to-1 ratio, while on Nasdaq a 2.13-to-1 ratio favoured decliners.
The S&P 500 posted no new 52-week highs and 88 new lows, while the Nasdaq Composite recorded 15 new highs and 323 new lows.
About 10.2 billion shares changed hands on US exchanges. That compares with the 8.3 billion daily average for the past 20 trading days.