October 29, 2018 / 9:12 PM / 9 months ago

US STOCKS-Wall Street drops on trade worries, S&P500 nears correction

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    * Nasdaq leads losses in volatile session
    * Amazon, Netflix among declining big growth names
    * Financials, staples mitigate declines
    * Red Hat surges on $34 bln purchase by IBM 
    * Indexes down: Dow 0.99 pct, S&P 0.66 pct, Nasdaq 1.63 pct 

 (Adds graphic on FANG stocks)
    By Lewis Krauskopf
    Oct 29 (Reuters) - U.S. stocks fell in a volatile session on
Monday, with the benchmark S&P 500 index ending close to
confirming its second correction of 2018, hurt by fresh worries
about U.S.-China trade policy tensions and a sharp drop in the
big technology and internet shares.
    Following a morning rally, major U.S. indexes pulled back
steeply after a Bloomberg report that the U.S. is preparing to
announce tariffs on all remaining Chinese imports by early
December if talks next month between presidents Donald Trump and
Xi Jinping falter.
    "Obviously this trade skirmish is metastasizing potentially
into something worse than it already is," said Mark Luschini,
chief investment strategist at Janney Montgomery Scott in
    After the S&P 500 dropped more than 10 percent from its
Sept. 20 record closing high during the session, the benchmark
index pared its losses late to close down 9.9 percent from its
peak. The Dow industrials also fell more than 10 percent from
its Oct. 3 record close during the session, before ending down
8.9 percent from the mark.
    On Monday, the Dow Jones Industrial Average fell
245.39 points, or 0.99 percent, to 24,442.92, the S&P 500
lost 17.44 points, or 0.66 percent, to 2,641.25 and the Nasdaq
Composite dropped 116.92 points, or 1.63 percent, to
    Major technology and growth stocks, such as Amazon.com Inc
, Google parent Alphabet Inc and Netflix Inc
, posted sharp declines. The S&P 500 technology sector
 fell 1.8 percent.
    The so-called FANG growth stocks - Facebook, Amazon,
Netflix and Alphabet - have lost more than $200 billion in
market value in the past two sessions.
    The industrials sector, which is seen as sensitive
to trade issues, dropped 1.7 percent, with Boeing Co
tumbling 6.6 percent.
    “The concern about global growth and global trade ...
continues to create an overhang for U.S. corporations and global
equities," said Chad Morganlander, senior portfolio manager at
Washington Crossing Advisors in Florham Park, New Jersey.
    "Growth stocks typically do poorly in situations of global
growth decelerating," he said. "You set yourself up for a more
defensive market until there’s a clear sign that investors can
grab hold of."
    Market volatility has spiked in recent weeks, stemming from
higher U.S. interest rates and worries about economic growth
peaking and trade tensions. Investors also may be increasingly
nervous about uncertainty surrounding U.S. congressional
elections, now just a week away.
    "Probably the most pervasive headwind is concern about
midterm elections," said Kristina Hooper, chief global market
strategist at Invesco. "That is weighing down stocks,
particularly technology as there is greater concern about
    Internet stocks also may have been wounded by Britain's plan
to tax the revenue from online platforms.

    In corporate news, shares of software maker Red Hat Inc
 surged 45.4 percent after the company agreed to be
bought by IBM Corp for $34 billion, but IBM shares fell
4.1 percent, weighing on the Dow and S&P.
    Investors who are bullish about stocks point to strong
corporate profits this year and economic growth, but there are
also concerns about the extent of a slowdown in earnings growth
next year, while weak housing data has raised some worries about
the consumer.
    Data on Monday showed U.S. consumer spending rose for a
seventh consecutive month in September, but income recorded its
smallest gain in more than a year amid moderate wage growth,
suggesting the current pace of spending was unlikely to be
    Declining issues outnumbered advancing ones on the NYSE by a
1.45-to-1 ratio; on Nasdaq, a 1.45-to-1 ratio favored decliners.
    The S&P 500 posted three new 52-week highs and 65 new lows;
the Nasdaq Composite recorded 23 new highs and 260 new lows.  
    About 9.3 billion shares changed hands in U.S. exchanges,
above the 8.5 billion daily average over the last 20 sessions.  

 (Additional reporting by Caroline Valetkevitch and April Joyner
in New York; Editing Clive McKeef)
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