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Stock Market News For Oct 19, 2018

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Markets ended sharply lower on Thursday as concerns over growth of global economy continued to dent investors’ confidence. Moreover, minutes of the Fed’s September meeting, which are being viewed as hawkish, continued to weigh on markets. Also, Treasury Secretary Steven Mnuchin pulled out of a Saudi Arabia investment conference, which increased concerns over the possibility of strained relations between the United States and Saudi Arabia. This saw all three major indexes ending in the red.

The Dow Jones Industrial Average (DJI) declined 1.3%, to close at 25,379.45. The S&P 500 slipped 1.4% to close at 2,768.78. The Nasdaq Composite Index closed at 7,485.14, skidding 2.1%. A total of 7.79 billion shares were traded on Thursday, lower than the last 20-session average of 7.95 billion shares. Decliners outnumbered advancers on the NYSE by a 3.47-to-1 ratio. On Nasdaq, a 3.26-to-1 ratio favored declining issues.

How did the Benchmark Perform?

The Dow lost 327.23 points, led by sharp decline in shares of Caterpillar Inc. (CAT - Free Report) . Shares of Caterpillar lost 4%. Shares of The Boeing Company (BA - Free Report) declined 1.7%, while 3M Company (MMM - Free Report) fell 1.3%. Caterpillar has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

The S&P 500 shed 40.43 points, closing just above its 200-day moving average, a key indicator of long-term price trends. The technology and consumer discretionary were the biggest sufferers. The Technology Select Sector SPDR (XLK) and Consumer Discret Sel Sect SPDR (XLY) declined 1.9% each. Of the 11 major S&P 500 sectors, nine ended in negative territory.

The tech heavy Nasdaq shed 157.56 points. Shares of Facebook Inc. and Amazon.com, Inc. (AMZN - Free Report) declined 2.8% and 3.3%. Shares of Netflix Inc. (NFLX - Free Report) lost 4.9%, while Alphabet Inc. (GOOGL - Free Report) declined 2.5%.

Worries of Rising Interest Rates Dent Investor Confidence

Markets have been suffering on worries of rapidly rising interest rates since last week. On Wednesday, stocks took a hit following the release of the minutes of the Fed September meeting, which showed that the central bank feels that interest rates should continue to rise till policy becomes restrictive. This has increases concerns of higher borrowing costs for both individuals and corporate.

The rise in treasury yield in the last few days has already made investors worried. The 10-year Treasury note climbed to a seven year high last week. The negative sentiment continued on Thursday’s as well, leading to huge selloffs.

Concerns of Slowing Global Growth Rattle Markets

Another reason behind Thursday’s huge selloffs was the growing fears of a United States-China trade war and concerns about the vitality of Asian markets particularly China. Chinese markets opened lower on Thursday after China’s currency, yuan, touched it weakest level since January 2017 briefly. Investors have been panicking for months since the tit-for-tat tariff war started, with no immediately signs of the trade spat coming to an end.

Also, stocks took a hit after Treasury Secretary Steven Mnuchin decided to pull out of an investment conference in Saudi Arabia, as the White House awaited the outcome of the investigations into the sudden disappearance of Saudi journalist Jamal Khashoggi. This raised concerns over the potential strain in relationship between the United States and Saudi Arabia.

Fears further escalated after Mario Draghi, president of the European Central Bank, cautioned that one of the potential risks for the economy was countries trying to circumvent EU budget rules. This sent Italian bond yields to a high with major European stock-market indexes to session lows.

Impressive Economic Data

The Labor Department said that first-time jobless claims fell by 5,000 from the week-ago period to only 210,000 Americans applying for initial jobless benefits in the week ending Oct 13. However, growing concerns of rapidly rising interest rates and slowing global economy continued to weigh on markets.

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