Last Friday, the stock market of the United States of America took another hit as the S&P 500 was “on the cusp of despair” after it dropped by nearly 2 percent.
The market was on the edge of correction territory following the disappointing forecasts from leading technology groups. It triggered a wider sell-off as the investors continued their retreat from the risky assets.
The S&P index was down by 1.7 percent last Friday to take its total drop for October down to 8.8 percent. The decline also put it on course for its worst month since the financial crisis way back in 2009.
It had plunged by more than 10 percent since it was able to reach its peak on the 21st of September – the typical definition of a correction – however, it pared losses to end above that level.
Stephen Innes, the head of trading at APAC, stated: “A tumultuous week for markets around the world culminating in a bumpy Friday session, putting the S&P 500 on the cusp of despair as real interest rates at these constraining thresholds is crowding out risk asset.”
The news was released despite information that revealed that the economy of the United States was growing at a rate of 3.5 percent in the third quarter.
The shares of Amazon slumped by 7.6 percent after they presented a discouraging outlook ahead of the Christmas shopping season, the greatest drop in the value of the company in a period of four years.
Elsewhere, the Nasdaq Composite and Alphabet both closed at 2.1 percent down, with the Alphabet losing nearly 11 per cent this month as the sell-off continued.
It comes as a result of investors leaving the tech trade despite the value of Amazon and Apple soaring to more than $1 trillion earlier this year.
The portfolio manager for BMO Global Asset Management in Chicago, Ernesto Ramos, stated: “It’s all been driven off quarter reporting.”
He added: “When the reports are bad in technology you get a really bad day because of the elevated valuations.”
The Dow Jones Industrial Average declined by 296.24 points, or 1.19 percent, to 24,688.31, while the S&P 500 lost 46.88 points and fell to 2,658.69, with both returning to negative territory for the year.