Markets closed sharply lower on Thursday, as trade was fears between the United States and China once again dented investors’ sentiments. Markets were further rattled after a Supreme Court ruling on sales tax saw shares of online retailers tumbling. This saw all three major indexes ending in the red, with the Dow posting its eighth straight day of decline.
The Dow Jones Industrial Average (DJI) declined 0.8%, to close at 24,461.70. The S&P 500 shed 0.6% to close at 2,749.76. The Nasdaq Composite Index closed at 7,712.95, declining 0.9%. A total of 6.87billion shares were traded on Thursday, lower than the last 20-session average of 7 billion shares. Decliners outnumbered advancers on the NYSE by a 2.29-to-1 ratio. On Nasdaq, a 2.58-to-1 ratio favored Declining issues.
How did the Benchmark Perform?
The Dow shed 196.1 points, posting its eighth straight day of decline, matching its longest losing streak since Mar 2017. The S&P 500 lost 17.56 points, its biggest single-day decline since May 29. Eight of the 11 major S&P 500 sectors ended in negative territory, with Energy Select Sector SPDR (XLE), Industrial Select Sector SPDR (XLI) and Materials Select Sector SPDR (XLB) losing 1.9%, 1.3% and 1.1%, respectively. Shares of Caterpillar (CAT - Free Report) declined 2.5%, while Boeing (BA - Free Report) fell 1.5%.
The tech-heavy Nasdaq lost 68.56 points, after closing at a record high on Wednesday, led by a rally in tech stocks. However, tech stocks weighed heavy on markets on Thursday after the Supreme Court ruled that states can collect sales tax from e-commerce companies that do not have a physical presence in their states.
This saw shares of e-commerce companies tumbling, with Amazon (AMZN - Free Report) and eBay (EBAY - Free Report) declining, 1.3% and 3.2%, respectively. Shares of Alphabet (GOOGL - Free Report) declined 1.2%. Amazon has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Trade War Fears Strike Back
Markets have been gripped by trade war fears for quite some time. Fears further escalated this week after President Donald Trump threatened to slap additional 10% tariffs on $200 billion worth in Chinese goods. Consequently, China too said that it will take retaliatory measures. This saw stocks tumbling, which continued on Thursday, as investors panicked leading to huge selloffs.
Supreme Court Makes it Difficult for Online Retailers
On Thursday, the Supreme Court in a ruling said that states could collect sales tax from online retailers, who do not have physical presence in their states. Till the ruling, retailers were required to collect sales tax only if they had a physical presence in a state. This gave e-commerce companies the advantage of not collecting sales tax thus making the product cheaper. This resulted in states making huge losses in revenues.
The new ruling now enables states to force online retailers to pay sales tax. This saw shares of online retailers like Amazon, E-Bay and Etsy, Inc. (ETSY - Free Report) taking a hit, while shares of brick-and-mortal stores like Walmart (WMT - Free Report) , Target (TGT - Free Report) and Dollar General (DG - Free Report) jumping.
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