Tech companies lead another steep sell-off in US stocks

Another torrent of selling gripped Wall Street Wednesday, sending the Dow Jones Industrial Average plummeting more than 600 points and erasing its gains for the year.

The tech-heavy Nasdaq composite bore the brunt of the sell-off, leaving it more than 10 percent below its August peak, what Wall Street calls a “correction.”

Technology stocks and media and communications companies accounted for much of the selling. AT&T sank after reporting weak subscriber numbers, and chipmaker Texas Instruments fell sharply after reporting slumping demand.

Banks, healthcare and industrial companies also took heavy losses, outweighing gains by utilities and other high-dividend stocks.

Disappointing quarterly results and outlooks continued to weigh on the market, stoking investors’ jitters over future growth in corporate profits. Bond prices continued to rise, sending yields lower, as traders sought safe-haven investments.

“Investors are on pins and needles,” said Erik Davidson, chief investment officer at Wells Fargo Private Bank. “There has definitely been a change in sentiment for investors starting with the volatility we had last week. The sentiment and the outlook seems to be turning more negative, or at the very least, less rosy.”

The S&P 500 lost 84.59 points, or 3.1 percent, to 2,656.10. The index is now off about 9.4 percent from its Sept. 20 peak.

The Dow tumbled 608.01 points, or 2.4 percent, to 24,583.42. The tech-heavy Nasdaq slid 329.14 points, or 4.4 percent, to 7,108.40. That’s the Nasdaq’s biggest drop since August 2011, but it’s still up 3 percent for the year.

The Russell 2000 index of smaller-company stocks gave up 57.89 points, or 3.8 percent, to 1,468.70.

Bond prices rose, sending the yield on the 10-year Treasury note down to 3.11 percent from 3.16 percent late Tuesday. The slide in bond yields came as traders sought out lower-risk assets.

Investors have grown concerned in recent weeks about whether Corporate America’s tax cut-fueled earnings growth this year will be arrested in coming months amid rising inflation, uncertainty over the escalating trade conflict between the U.S. and China and the likelihood of higher interest rates. Recent data showing the housing market is slowing have also fueled speculation that U.S. economic growth will start to slow next year.

The outlooks from some of the companies that reported third-quarter results this week, including Caterpillar, 3M and United Parcel Service, have stoked those worries.

“You’ve seen more discouraging (company) commentary this quarter than you have the last two,” said Tom Martin, senior portfolio manager with Globalt Investments. “You’re really starting to get more of a groundswell of caution. There’s some concern about the fourth quarter and what that’s going to look like.”

Shares in iRobot plunged 12.3 percent to $80.49 after the robotics technology company said tariffs will reduce its profitability in the fourth quarter.

Texas Instruments fell 8.2 percent to $92.01 after the chipmaker delivered quarterly results that fell short of Wall Street’s forecasts, noting that demand across most markets is slowing.

S&P 500 companies are expected to deliver 22 percent earnings growth for the third quarter, with every sector except communications services, which includes Walt Disney, AT&T, Netflix and Google parent Alphabet, expected to show earnings growth, according to S&P Global Market Intelligence.

About 24 percent of the companies in the S&P 500 had reported third-quarter results as of Wednesday. Of those, 57 percent delivered earnings and revenue results that topped Wall Street’s forecasts.

High-flying companies like Netflix and Amazon took some of the biggest losses Wednesday. Netflix gave back 9.4 percent to $301.83 and Amazon dropped 5.9 percent to $1,664.20.

Apple slid 3.4 percent to $215.09, while Alphabet fell 5.2 percent to $1,057.12. Facebook gave up 5.4 percent to $146.04.

AT&T was among the big decliners in the media and communications sector, dropping 8.1 percent to $30.36 after the communication giant’s latest quarterly results fell short of Wall Street’s expectations.

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