UKX FTSE 100 Index

By Mark DeCambre, MarketWatch , Chris Matthews

Stock benchmarks briefly erased 2018 gains

U.S. stocks fell sharply Tuesday morning, extending a pre-Thanksgiving rout that has been fueled mostly by a selling in shares of technology and internet-related companies. Sharp declines in Target and Lowe's after disappointing earnings also contributed to the tone.

U.S. financial markets will be closed Thursday for the Thanksgiving Day holiday (http://www.marketwatch.com/story/which-markets-are-closed-on-thanksgiving-2018-11-20)and see an early close Friday.

How are benchmarks performing?

The Dow Jones Industrial Average fell 332 points, or 1.3%, at 24,691, and tumbled by as many as 596 points or 2.3% at the session's lows. The S&P 500 index was down 23 points, or 0.9%, at 2,666, while the Nasdaq Composite Indexwas off by 45 points to 6,984, a drop of about 0.6%. All three benchmarks were solidly lower but off the worst of Tuesday's slide.

The opening drop momentarily erased year-to-date gains for both the Dow, S&P 500 and the Nasdaq.

Monday's losses resulted in the S&P 500 and the Dow's worst start to a Thanksgiving week since 2011, while the Nasdaq registered its worst such start since 2000, according to Dow Jones Market Data.

What's driving the market?

U.S. investors continue to be plagued by doubts surrounding slowing global growth, U.S.-China trade relations, and the steady rise in interest rates that can be expected to continue into next year. These doubts have accumulated to induce fears that we are growing nearer to the end of the current economic expansion, strategists say.

The previously highflying technology sector has the most to lose from this change in sentiment. Tech stocks extended a decline that led the market lower Monday, with reports from China adding fuel to the day's selling after officials in Beijing uncovered widespread evidence of anticompetitive behavior by Korean rivals. According to The Wall Street Journal, Beijing investigators implicated Samsung Electronics (005930.SE), SK Hynix (000660.SE) and Micron Technology (MU).

Market participants believe that China's investigation may intensify festering issues around trade relations between China and other major counterparts, including the U.S.

Meanwhile, Target Corp.'s (TGT) stock plunged Tuesday, after the discount retailer reported fiscal third-quarter earnings and same-store sales that missed expectations (http://www.marketwatch.com/story/targets-stock-tumbles-after-profit-same-store-sales-miss-expectations-2018-11-20). The retailer's loss also has the potential to drag down shares of its competitors.

What are strategists saying?

"Economic data remain strong, but the trend in the trend is deteriorating," Peter Lazaroff, co-chief investment officer at Plancorp, told MarketWatch. He made the case that the recent turn in sentiment is due to investors believing that we've already experienced the fastest rates of growth for both the U.S. economy and corporate earnings.

"Economic conditions are good, but the chances of economic conditions deteriorating over the next year or more is much higher than a surprise on the upside," Lazaroff said.

At the same time, Lazaroff emphasized that volatility levels have merely returned to ordinary levels, whereas the low volatility that has characterized much of today's bull market is the outlier. "This sort of price action is extremely normal," he said. "What was strange was the outsized returns investors have earned in recent years with effectively no volatility."

Which stocks are in focus?

Shares of Apple Inc. (AAPL) are down 4%, extending the previous session's losses to a 4 1/2 -month low and threatening to leave the stock in bear-market territory (http://www.marketwatch.com/story/apples-stock-on-track-to-open-in-bear-market-territory-joining-all-other-faang-stocks-2018-11-20), defined as a drop of at least 20% from a recent peak.

Check out: Ray Dalio says it's just like the 1930s for investors right now' (http://www.marketwatch.com/story/ray-dalio-says-its-just-like-the-1930s-for-investors-right-now-2018-11-20)

Shares of Kulicke & Soffa Industries Inc. (KLIC) after up 7% Monday, after the semiconductor equipment maker beat fiscal fourth-quarter earnings expectations. The stock had been down roughly 12% at the start of trade, before reversing those losses Monday morning.

Lowe's Cos.'s stock (LOW) is down 2.3%, after the home-improvement retailer reported fiscal third-quarter earnings that beat expectations but same-store sales that missed (http://www.marketwatch.com/story/lowes-stock-drops-after-earnings-beat-but-same-stores-sales-miss-gross-margin-declines-2018-11-20).

Target shares traded nearly 9% lower Tuesday, after the retailer announced (http://www.marketwatch.com/story/targets-stock-tumbles-after-profit-same-store-sales-miss-expectations-2018-11-20) fiscal third-quarter earnings and same-store sales that came in below Wall Street estimates.

Cambell Soup Co. (CPB) shares are rising nearly 7% Tuesday morning, after a third-quarter earnings report (http://www.marketwatch.com/story/campbell-soup-shares-jump-after-earnings-beat-upbeat-guidance-2018-11-20) that showed the firm beating earnings estimates, while the company affirmed its upbeat guidance for 2019.

Hormel Foods Corp. (HRL) stock has fallen more than 3% Tuesday morning, after missing revenue estimates in a Tuesday morning earnings report.

Shares of Kohl's Corp. (KSS) are tumbling 9% early Tuesday, even after the firm beat Wall Street estimates for earnings and profit and raised its full-year 2018 guidance. Shares of the discount retailer are still up 8% year-to-date.

Shares of Analog Devices, Inc. (ADI) are on the rise, up 3.3% after beating analyst estimates for fiscal fourth quarter earnings and revenue in a Tuesday-morning earnings release.

What data are investors watching?

Housing starts came in at a 1.228 million seasonally adjusted annual rate in October, while permits came in at a 1.263 million rate, with housing starts coming in just below consensus estimates per a MarketWatch poll of economists. Year-over-year, growth in housing starts has steadily slowed in 2018 (http://www.marketwatch.com/story/housing-starts-rebound-in-october-even-as-housing-shortfall-lingers-2018-11-20).

Investors are particularly focused on the housing market after a disappointing read in home builders' confidence (http://www.marketwatch.com/story/home-builder-confidence-tumbles-the-most-since-2014-as-housing-headwinds-catch-up-2018-11-19) on Monday, which contributed to Monday's decline.

How are other markets trading?

Stock markets in Asia traded lower Tuesday (http://www.marketwatch.com/story/asian-stocks-drop-as-tech-pullback-nissan-ceos-arrest-takes-toll-2018-11-19), with Japan's Nikkei losing 1.1%, Hong Kong's Hang Seng Index down 2%, and the China's Shanghai Composite Index falling 2.1%.

European stocks are also trading down Tuesday, with the Stoxx Europe 600 , FTSE 100 , and Germany's DAX 30 all falling more than 1% on the day.

Crude-oil futures continued to struggle Tuesday, down more than 5.5%, while gold is down 0.2% and the U.S. dollar is rising 0.3%.

(END) Dow Jones Newswires

November 20, 2018 11:07 ET (16:07 GMT)

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