U.S. stocks fell sharply Monday, in the latest example of heavy intraday volatility driven by both uncertainty surrounding trade policy and weakness in the large-capitalization technology and internet sectors.
The day’s weakness was broad-based, with all 11 S&P 500 sectors dropping and eight of them shedding more than 2%. There was particular weakness in the technology and consumer-discretionary sectors, which took the Nasdaq into negative territory for the year and brought it within striking distance of closing in correction territory, defined as a 10% drop from a peak.
In an ominous sign for where equities may be headed, the S&P 500 closed below its 200-day moving average for the first time since June 2016, after the United Kingdom voted to leave the European Union. That closely watched technical level — which the Dow nearly closed below as well — is seen as a gauge of the long-term momentum in an asset.
What are the main benchmarks doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.67% fell 458.92 points, or 1.9%, to 23,644.19. Losses were widespread in the blue-chip average, with only one of the 30 components, UnitedHealth Group Inc. /zigman2/quotes/210453738/composite UNH -0.22% , ending in positive territory. All 30 components were below their 50-day moving average, a sign that short-term momentum may be trending to the downside.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.56% lost 59 points to 2,581, a decline of 2.2%. Only 13 of the S&P’s components ended in the green Monday.
The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.30% was down 193 points, or 2.7%, to 6,870. With Monday’s tumble, it is now down 0.5% for 2018. The tech-heavy index is also near correction territory, defined as a drop of at least 10% from a peak. While such drawdowns are common, historically speaking, the Nasdaq hasn’t had a correction since February 2016.
The Nasdaq-100 Index /zigman2/quotes/210598364/realtime NDX -0.31% fell 2.9% and all of its components ended in negative territory. The index ended in negative territory for the year.
The day represented a rough start to the second quarter, but it was merely the latest example of heavy volatility, which has been plaguing markets for the past several weeks. The Dow and S&P broke a streak of quarterly gains in the first quarter, and the pair, along with the Nasdaq, logged steep declines for March. Historically, April has been a strong month for stocks, including the strongest of the year for the Dow.
What’s driving markets
Trade policy continued to be in the forefront in the minds of investors after China announced tariffs on about 130 U.S. goods, including a 25% penalty slapped on U.S. pork and 15% on fruit. The news means China has made good on its threat to retaliate against the Trump administration’s tariffs on Chinese steel and aluminum imports.
Technology and internet stocks also remained in focus, as the sector — still one of the stronger-performing of the year — has undergone heavy volatility. Facebook Inc . /zigman2/quotes/205064656/composite FB +0.75% , Tesla Inc . /zigman2/quotes/203558040/composite TSLA +1.03% and Amazon.com Inc . /zigman2/quotes/210331248/composite AMZN -0.42% in particular have all seen steep moves of late, and they all tumbled in Monday’s session.