U.S. stocks tumbled to start the second quarter, as the weakness in technology shares worsened amid renewed presidential criticism of Amazon.com and retaliatory tariffs from China. Treasuries pared losses and gold rallied.
The S&P 500 Index slumped for the sixth time in eight days, punching through its average price for the past 200 days, a level of support that’s held in three prior bouts of selling. The index is now lower by more than 10 percent from its January record. Volumes were 13 percent below average and the CBOE Volatility Index jumped to 23.5.
The Nasdaq 100 Index lost 2.9 percent as investors continued to offload some of the bull market’s biggest gainers. Amazon and Netflix sank at least 6 percent. The two had led the rally in the past year with gains of more than 50 percent. Bonds erased declines and gold spiked higher as the equity selling picked up steam.
“This is definitely a flight to safety type of market,” said Peter Jankovskis, co-chief investment officer at Oakbrook Investments. “You’re seeing people coming out of the stocks that had been performing well. There’d been various stories that momentum was extended in the market place, and I would say today’s activity supports that trying to unwind a bit.”
Investors are entering the second quarter on the defensive after the worst three months for global stocks in more than two years. February and March were characterized by a surge in volatility amid a barrage of concerns, from escalating trade tensions to a selloff in technology shares. Focus this week will turn to U.S. labor market data Friday, which is expected to show unemployment fall to its lowest level since 2000, while traders will also have one eye on trade developments.
“The U.S. markets will likely serve as a focal point as investors stateside and elsewhere consider what tact the administration will take toward trade in the weeks ahead and what effects it could have on the US economy and the economies of its trading partners,” John Stoltzfus, the chief investment strategist of Oppenheimer & Co., wrote in a note to clients Monday.
Equities in Japan, China and South Korea declined during late Monday trading, reversing an earlier advance. Most European markets were closed for the Easter holiday. China on Monday to tariff treatment for more than 100 types of U.S. goods in reply to Trump’s ordering higher steel and aluminum import duties. Agricultural commodities and metals gained.
“The U.S. economy is showing a lot of symptoms of being late-cycle,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. “I’m looking for a downturn in maybe late next year or early 2020, with the fiscal stimulus they’re getting from the White House giving us a little bit of late-cycle expansion, but nothing that changes the game plan.”
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