Tech stocks get battered, helping bash Wall Street
U.S. stocks tumbled into correction mode to start off the second quarter on Monday, as technology shares got battered on worries sparked by trade concerns and tweets by President Trump and Elon Musk.
"Today it's the tech and tariff trade that has the market rattled," said Nick Raich, CEO of The Earnings Scout.
The Dow Jones industrial average shed 458 points, or 1.9 percent, while the S&P 500 dropped 2.2 percent to head back into correction turf, down 10 percent from its record high on January 26. But the day's biggest loser was the tech-heavy Nasdaq, which plummeted 2.7 percent to close in correction mode, or 10 percent from its market high.
Retaliatory tariffs imposed by China on a slew of U.S. exports and Mr. Trump's ongoing criticism of Amazon (AMZN) helped push equities into a downward spiral.
"We're starting a new quarter on an awfully soft footing," said Art Hogan, chief market strategist at B. Riley RBR. He chalks up the market's slide to "tariffs, protectionism and chaos in the White House."
The president has for days been assailing Amazon, lately focusing on a "scam" contract with the U.S. Postal Service that has actually been judged profitable for the post office.
"It's a long way to go to say 'I don't like the Washington Post'," said Hogan of the newspaper owned by Amazon owner Jeff Bezos.
Mr. Trump also sent a series of tweets hitting Mexico for lax border security.
From Hogan's standpoint, the president's demands about Mexico and the border wall he wants built spurred more worries than China's tit-for-tat response to U.S. tariffs. "China is important, but we trade more with Mexico and Canada," said Hogan of concerns about U.S. efforts to renegotiate the North American Free Trade Treaty, or NAFTA, with its neighbors.
"We import a lot of technology from China," said Paul Nolte, a senior vice president and portfolio manager at Kingsview Asset Management. "What may happen here is we see retaliation from China specific to technology."
Intel (INTC) shares were slammed after Bloomberg News cited people familiar with the matter in saying Apple (AAPL) planned to use its own chips in Mac computers starting as early as 2020.
Tesla (TSLA) came under regulatory scrutiny after a second crash this year involving the electric car company's Autopilot driver-assistance system, the latest of which involved a death. Moody's last week downgraded Tesla's credit rating to junk status. And the company is expected to report in coming days on Model 3 deliveries.
Musk didn't help matters by tweeting a series of April Fools' day jokes about Tesla going bankrupt.