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Investors have lost confidence in the health of the global economy. Interest rates are falling, so is the price of oil and the stock market continues to slide.
Once again, stocks opened higher in the morning but fell sharply in the afternoon. The Entrepreneur Index™ was down 2.83 percent today with only two stocks posting gains. The major indexes followed suit. The Dow and S&P 500 indexes were down 2.11 percent and 2.08 percent respectively, while the Nasdaq Composite was off 2.27 percent. The three indexes are now technically in correction territory — down more than 10 percent from recent highs.
All eyes are now on the Federal Reserve Bank, which is expected to raise the Fed Funds rate another quarter point at its meeting on Wednesday. While President Trump and others in his administration continue to pressure the Fed to back off, a decision not to raise rates might actually spook the market now. Investors are, however, looking for an indication that the central bank will at least reduce the number of rate hikes it planned for next year.
Technology stocks took a beating today. Twitter, one of the strongest stocks in the sector lately, was down 6.8 percent — the biggest decline on the Entrepreneur Index™. The company disclosed that some user data had been exposed to internet addresses in China and Saudi Arabia. Amazon (-4.46 percent), salesforce.com (-4.53 percent) and Cognizant Technology (-4.57 percent) also had big drops on the day.
Tesla, another star through much of the recent volatility, was also down sharply, falling 4.73 percent. Worries about slowing economic growth may be the biggest factor, but competitors like Audi and Hyundai are also unveiling electric vehicles that may pose problems for the market leader.
The real estate investment trusts (REITs) got slammed today, despite the fact that interest rates fell sharply. Investors are worried that commercial property values are headed for a fall if the economy slows down. The biggest declines were posted by shopping center managers Macerich Company (-6.22 percent) and Kimco Realty (-5.84 percent). Office property manager Boston Properties was down 4.53 percent.
Clothing-makers also had a rough day. L Brands, maker of Victoria’s Secret lingerie, was down 4.28 percent, while Gap Inc. fell 4.32 percent. Under Armour Inc., which has fallen 25 percent so far this month, was down 3.11 percent today.