US Stock Market Takes A Tumble After Investor Selling Frenzy

The US stock market took a big tumble mid-week, hinging on both the Dow Jones Industrial Average and the Standard & Poors 500 closing in negative numbers.  This is a major development because both of these indices managed to hit historic highs this year, but that just set up a more notable decline.  The Dow Jones industrial average hit its all-time high just last week, on October 3, before falling 2,191 points.  The Standard & Poors Index reached its peak on September 20 before falling 285 points.

At the end of the day, on Wednesday, the Dow finished 608 points (2.4 percent) down, at 24,853 and the S&P fell 85 points (3.1 percent) to close at 2,656.  The tech-stocks in NASDAQ also fell, with this index closing down 329 points (4.4 percent) at 7,108.

Obviously, the massive drop is concerning, especially when analysts tried to figure out the cause.  Many investors speculate higher interest rates, more tariffs, and the escalating trade war with China as the core source of the market decline. Essentially stock sales have escalated as concerns over corporate profits outlook also soars.

All in all, tech industry stocks, as well as stocks with media and communications companies, accounted for most of the selling frenzy. For one, AT&T fell quickly on the heels of reporting weak subscriber numbers.  Also, computer chipmaker Texas Instruments reported a slump in demand, which also resulted in faster sell-offs.  Shares in home tech developer iRobot fell an alarming 12.3 percent, to $80.49

However, banking, healthcare, and industrial companies also reported some pretty big losses.  While utility and other consistently high-dividend stocks did show gains, all the losses easily outweighed the promise of these gains.

In response to the shift, Wells Fargo Private Bank chief investment officer Erik Davidson, commented, “Investors are on pins and needles. There has definitely been a change in sentiment for investors starting with the volatility we had last week. The sentiment and the outlook seem to be turning more negative, or at the very least, less rosy.

And investors have expressed growing concern over whether the broad corporate tax cut that fueled overall earnings growth over the past year will hit a sudden stop within the next few months.  Rising inflation and trade confusion probably are not going to help.