NEW YORK, April 2 (Reuters) - U.S. benchmark stock indexes fell sharply on Monday, undermined by weakness in the technology sector while a growing trade dispute with China has investors pulling back on concerns over economic growth.
The S&P 500 index broke below the significant 200-day moving average for the first time since Feb. 9 and a close below would be the first since June 27, 2016.
Amazon, led the decline in the technology-heavy so-called “FANG” group of companies. The online retailing giant dropped nearly 5 percent after President Donald Trump launched his latest attack over the pricing of the retailer’s deliveries through the U.S. postal system and promised unspecified changes. COMMENTS:
PETER KENNY, SENIOR MARKET STRATEGIST, GLOBAL MARKETS ADVISORY GROUP, NEW YORK:
“We’re at the cusp of a fairly significant reevaluation across all market sectors, but largely focused on large cap technology. This selloff that we’re seeing in large cap technology is affecting the broader market, but as often happens when you see significant moves, that are correlated across indices and verticals, there are multiple reasons for the selloff.”
“When this started on February 2nd, we’ve had a re-test of a likely fail, which means that going into earnings season, markets and equities generally speaking will likely be at the lowest point in terms of valuation that they’ve been in some time, which should lead to some comfort, frankly, as odd as that may sound. So earnings season will bring an alternative to what we’ve seen over the last four to six quarters.”
DAVID KOTOK, CHAIRMAN AND CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS, SARASOTA, FLORIDA:
“This is a Donald Trump market reaction. The president and his behavior and his tariff trade barrier policy and his bellicose bullying are responsible for the stock market selloff. The Chinese are matching the US one-for-one and we are now engaged in a very dangerous game.”
“The man attacks viciously, so he has attacked Jeff Bezos and Amazon, he’s attacked one of the two largest trading partners of the US, and his White House is in full disarray.”
“Markets have broken down, so the momentum optimism has been broken; how much farther they go down remains to be seen. I’m taking advantage of these markets and am heavily overweighted financials and banks. I didn’t buy today, we’re in free-fall, but I might tomorrow.”
“We may get to a 20 percent down bear market before this runs its course. The question is when do you take positions and what is your time horizon? And mine is 24 months and I believe we don’t get a recession, and I want to be a buyer when markets are ugly and in weakness.”
FRITZ FOLTS, CHIEF INVESTMENT STRATEGIST, 3EDGE ASSET MANAGEMENT LP, BOSTON:
“We’ve been lightening up (equity exposure). For us it’s seeing the back-up in short yields. That’s just one of the things when we run our models we pay a lot of attention to. And credit spreads widening out. Those are two things we just take very seriously and we broke below the 200-day moving average today.”
“2017 has left the building and I feel like it’s hard to get use to an environment that could be dramatically different from what we’ve been in for a while, and people are just trying to get their feet under themselves.”
MARKETS: STOCKS: The Dow Jones Industrial Average fell 545.4 points, or 2.26 percent, to 23,557.71, the S&P 500 lost 66.49 points, or 2.52 percent, to 2,574.38 and the Nasdaq Composite dropped 200.98 points, or 2.85 percent, to 6,862.46. TREASURIES: Benchmark 10-year notes last rose 2/32 in price to yield 2.7389 percent, from 2.744 percent late on Thursday.
The 30-year bond last fell 3/32 in price to yield 2.9753 percent, from 2.971 percent late on Thursday. CURRENCIES: The U.S. dollar index fell 0.04 percent, with the euro down 0.25 percent to $1.229.
The Japanese yen strengthened 0.25 percent versus the greenback at 106.01 per dollar, while Sterling was last trading at $1.4028, up 0.09 percent on the day. (Reporting By Wall Street team; Editing by Daniel Bases)