Wall Street headed for its worst month since the financial crisis after discouraging forecasts from some of the world’s largest technology groups triggered a wider sell-off, reigniting fears the longest bull market in history had come to a halt. The downturn in US equities resumed on Friday despite data that showed the US economy was expanding at a robust 3.5 percent annualized rate in the third quarter, sending the S&P 500 down by as much as 2.9 percent and once again wiping out all of this year’s gains.
Investors have become increasingly concerned that most major central banks will continue to wind down their crisis-era stimulus programmes despite signs economies outside the US are slowing with mounting trade tensions threatening to do further damage. “It’s a bit of a perfect storm,” said Kristina Hooper, chief global market strategist at Invesco. “The Federal Reserve is normalizing monetary policy . . . and we’re beginning to see the tangible negative effects of the trade wars.” Investor concerns have been exacerbated by the patchy third-quarter results of a handful of bellwether industrial companies this week, such as Caterpillar, and disappointing outlooks from Amazon and Alphabet.
The S&P 500 index lows on Friday took its drop from a September 21 peak to more than 10 percent — the typical definition of a correction. The index ended another turbulent trading day down 1.7 percent, taking its decline in October to 8.8 percent and putting it on track for its worst monthly performance since February 2009. A cautious outlook on Thursday night from Amazon for the holiday shopping season sent its shares down 7.6 per cent, its biggest one-day slump in four years. Stock in Alphabet, Google’s parent, fell 2.1 percent. Overall, the Nasdaq Composite, which is home to many tech companies, closed down 2.1 percent.