Trader Jonathan Mueller works in his booth on the floor of the New York Stock Exchange, Friday, Oct. 26, 2018. Stocks are opening broadly lower on Wall Street, a day after a massive surge, as a number of big companies reported disappointing results. (AP Photo/Richard Drew)

Stocks slump again, putting market back into red for year

October 26, 2018 - 11:13 am

Stocks are back in the red for the year Friday as another big slump rocks Wall Street. The latest plunge follows a big rally the day before and comes at the end of an unusually turbulent week of trading.

Longtime market favorites like Amazon and Alphabet, Google's parent company, led the way lower after reporting weak results. Media and communications stocks, banks and health care companies also took heavy losses.

The Dow Jones Industrial Average fell more than 300 points and the S&P 500, the benchmark for many index funds, is now down 9 percent from its September peak. Bond prices rose, sending yields lower, as investors seek less risky assets.

The stock market has whipsawed this week, with the Dow slumping 500 points over the first two days of the week, plunging 608 on Wednesday, soaring 401 points Thursday and then plunging again on Friday. The results came during the busiest week for third-quarter company earnings.

"We're going through this transition where, earlier in the year, the corporate earnings results were just a blowout and now they're more mixed," said David Lefkowitz, senior equity strategist Americas at UBS Global Wealth Management. "That's causing some of this volatility."

The S&P 500 index slid 46 points, or 1.7 percent, to 2,659 as of noon Eastern Time. The Dow dropped 326 points, or 1.3 percent, to 24,656. The average was briefly down more than 500 points.

The tech-heavy Nasdaq composite lost 147 points, or 2 percent, to 7,170. The Russell 2000 index of smaller-company stocks gave up 23 points, or 1.6 percent, to 1,477. The Dow and S&P 500 are now down for the year again.

Stock trading turned volatile in October after a placid summer, with big sell-offs in the sectors that have powered the bulk of the gains during the market's long bull run. Disappointing quarterly results and outlooks have stoked investors' jitters over future growth in corporate profits, a key driver of the stock market. Traders are worried that rising interest rates and the escalating U.S.-China trading dispute could hurt the economy and dampen corporate earnings growth.

Amazon and Google parent company Alphabet slumped after both companies reported quarterly reported revenue figures that fell short of analysts' estimates. Amazon sank 8.3 percent to $1,634.57 while Alphabet slid 3.7 percent to $1,063.19.

Mattel dropped 2.6 percent to $13.48 after the toy maker served up quarterly results that fell short of analysts' forecasts.

In a bright spot, chipmaker Intel gained 3 percent to $45.63 after it reported strong quarterly results and raised its outlook.

The Commerce Department said the U.S. economy's gross domestic product, a measure of total output of goods and services, grew at a robust annual rate of 3.5 percent in the July-September quarter. That's higher than what many economists had been projecting and followed an even stronger 4.2 percent rate of growth in the second quarter. The two quarters marked the strongest consecutive quarters of growth since 2014.

U.S. bond prices rose. The yield on the 10-year Treasury note fell to 3.08 percent from 3.13 percent late Thursday.

Benchmark U.S. crude rose 0.1 percent to $67.43 a barrel in New York. Brent crude, the benchmark for international oil prices, rose 0.4 percent to $77.20 a barrel in London.

The dollar fell to 111.54 yen from 112.61 yen on Thursday. The euro rose to $1.1381 from $1.1359.

Major European stock indexes fell. Germany's DAX slipped 1.1 percent, while France's CAC 40 dropped 1.8 percent. Britain's FTSE 100 slid 1.3 percent. In Asia, Japan's benchmark Nikkei 225 lost 0.4 percent, while South Korea's Kospi dropped 1.8 percent. Australia's S&P/ASX 200 was flat. Hong Kong's Hang Seng sank 1.1 percent.

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