US stocks tumbled in a volatile day of trading Friday as a technology rout rattled global markets, with concerns about rising rates and the prospect of slowing economic growth around the world wiping out Wall Street’s 2018 gains for the second time this week.
The Dow Jones Industrial Average pared losses to close down about 300 points, or 1.2%. The Nasdaq Composite shed more than 2%, and the S&P 500 ended down 1.7% after briefly dipping into correction territory. The sell-off turned both the Dow and the S&P 500 negative for the year, with stocks on track for their worst October since the financial crisis.
High-flying technology companies took the biggest hits after posting disappointing earnings. Amazon‘s revenue fell short of expectations and its fourth-quarter guidance disappointed, sending shares into a bear market, down more than 20% from their peak. Google parent company Alphabet beat on the bottom line, but missed on revenue. Snap hit an all-time low after the company said it lost 2 million daily users.
“While a lot of the recent sell-off (and headlines) have been dominated by tech, the sell-off has been very broad-based in nature,” Scott Buchta, head of fixed income strategy at Brean Capital, wrote in an email.
“Although this morning’s GDP report may help bring some near-term calm to the markets, we expect to see intraday volatility remain elevated due to the technical nature of the markets (driven largely by algos).”
Before the open, the Commerce Department said the US economy grew in July through September at a slightly slower pace than a blockbuster expansion earlier in the year, marking the best back-to-back quarters since 2014. With strong consumer spending offsetting weaker investment and exports, gross domestic product rose at a seasonally adjusted 3.5% in the third-quarter.
“In one line: Strong GDP growth hides soft capex and massive trade deterioration,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Investors moved to the relative safety of US government bonds, which move inversely to yields, with the 10-year falling 3.9 basis points to 3.077%, its lowest level in three weeks. Gold, another safehaven, jumped to its highest level since July — at around $1,234 per ounce.