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US: Stocks end sharply lower as rally fades

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[NEW YORK] Wall Street stocks ended decisively lower Monday after an early rally fizzled and was replaced by aggressive selling amid worries over slowing earnings growth.

The Dow Jones Industrial Average dropped 1.0 per cent to 24,442.92, after experiencing a swing of more than 900 points between its session peak and nadir.

The broad-based S&P 500 shed 0.7 per cent to end at 2,641.25, also recovering from its worst point of the day, while the tech-rich Nasdaq Composite Index lost 1.6 per cent to close at 7,050.29.

US stocks opened firmly higher, but the rally began fading in late morning before turning sharply negative in the last 90 minutes of trading. The Dow was down more than two per cent and the Nasdaq more than three per cent before staging a partial comeback before the finish.

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Market voices on:

"The inability of the market to hold the rally is keeping people out of the market," said Karl Haeling of LBBW, who said uncertainty over the upcoming congressional elections was adding to the skittishness.

"As we get to the November 6 election, people don't want to do anything new on the market," Mr Haeling said.

Large technology companies were among the weakest group, with Amazon slumping 6.3 per cent, Google-parent Alphabet 4.8 per cent and Netflix 5.0 per cent.

The S&P 500 has lost more than nine percent in October amid worries that US corporate earnings have peaked and rising US interest rates will slow the economy.

Analysts also pointed to a midday report from Bloomberg News on Monday that President Donald Trump's administration plans more tariffs on China if talks between Trump and Chinese President Xi Jinping next month are unsuccessful.

Stocks have fallen even though most US companies have reported better than expected earnings.

"This is an ominous sign for the market," Morgan Stanley said in a research note. "Investors are shrugging off solid numbers as concerns about future earnings mount."

Dow member IBM dropped 4.8 per cent after announcing a US$34 billion takeover of open source software company Red Hat, while Red Hat surged 45.3 per cent.

Fellow Dow member Boeing dropped 6.5 per cent following a fatal crash of all 189 passengers operated by Indonesian Lion Air on a Boeing-737 MAX. Boeing is seen as vulnerable to further tariffs if the US-China trade dispute worsens.

AFP