Markets

US stocks plunge again as losses approach trillion-dollar mark

Tech stocks worst hit, as Apple sheds $45bn and Amazon is down $24bn on last week

US stocks had opened higher but negative sentiment soon took over. Photograph: Bloomberg

Fri Dec 7 2018 - 22:39

US stocks plunged again on Friday, with technology shares bearing the worst of the selling, as the Trump administration pressed its trade war with China and the latest batch of economic data added to concern that growth has peaked. Almost $1 trillion has been wiped off the value of US stocks in four days. Apple has shed $45 billion, while Amazon is worth $24 billion less than it was a week ago.

The declines came after European stocks had posted a limited recovery on Friday, and accelerated as US markets neared their close.

Wall Street recorded its biggest weekly drop since March.

In Dublin, the Iseq closed just over 1 per cent higher, having shed 3.11 per cent ion the previous session.

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After posting a recovery of sorts in the final hour on Thursday, the benchmark S&P 500 closed 2.35 per cent weaker on Friday, while the Dow Jones Industrial Average was 2.24 per cent lower at the close. The technology-heavy Nasdaq suffered a fall of more than 3 per cent.

The trade outlook appeared to take a negative turn, with the US alleging that Huawei breached sanctions to do business with Iran.

Stocks had opened higher after a US November jobs report showed moderation in the labour market, giving succour to proponents for a slower pace of Federal Reserve interest-rate increases.

“What we think is going on is a repricing of growth,” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust.

“The bond market is essentially saying we don’t see the kind of growth that we’ve had. So what the market is doing is repricing stocks, particularly those that have performed extraordinarily well, to a lower growth rate.”

Rebound

In Europe, stocks rebounded from their worst day in more than two years, while Asian shares posted modest gains as investors sought to end a bruising week on a more upbeat note. Top-flight stocks in London were boosted by rising oil prices after an Opec deal to limit production, but observers said a recovery could not make up for the "dreadful" week on the markets.

“Volatility is high and investors are twitchy. It has been a dreadful week for European markets, and today’s positive move can’t mask the previous losses,” said David Madden, market analyst at CMC Markets UK. The pan-European Stoxx 600 index rose 0.62 per cent, while an index of London’s 100 largest listed companies rose 1.1 per cent.

Dublin traders said there was a “Brexit breather” after a late US rally on Thursday and ahead of next week’s expected Brexit developments.

“The European markets in general were stronger following the US rally last night,” one trader said, noting the recovery ran out of steam before it could make up for the losses of the week.

“The volumes weren’t there.”

Sterling was steady as UK prime minister Theresa May was said to be weighing a plan to postpone the vote on her Brexit deal.

– PA/Reuters/Bloomberg

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