The Dow, S&P 500 and Nasdaq each suffered their fifth straight weekly decline, the longest such streak in nearly four years. The Dow is now down more than 10% from its February 10 record close, becoming the latest major index to confirm a correction, commonly defined as a drop of 10% from its prior high. The Dow follows the Nasdaq in crossing the correction threshold while the Russell 2000, which was the first on the correction path, confirmed it last Friday.
“Clearly, the overall tone has turned very negative and now we have broken down into correction territory,” said Ken Polcari, partner and chief market strategist at SlateStone Wealth in Jupiter, Florida.
“In the end, I would view this as a big opportunity, but would not be surprised if we see a drawdown anywhere between 15% to 20% before it is over.”
The Dow Jones Industrial Average fell 793.47 points, or 1.73%, to 45,166.64, the S&P 500 lost 108.31 points, or 1.67%, to 6,368.85 and the Nasdaq Composite lost 459.72 points, or 2.15%, to 20,948.36.
The CBOE Volatility Index, considered Wall Street’s fear gauge, was up 3.61 points to close at 31.05, its highest close since April 21. Megacaps were the biggest drag on the benchmark S&P index, with Nvidia down 2.2% as the biggest weight, while Amazon dropped 4%. Software shares were also under renewed selling pressure, and the S&P 500 software and services index closed at its lowest level since November 6, 2023. Along with pressure from Amazon, consumer discretionary stocks dropped 3.1%, the worst-performing of the 11 major S&P sectors, as cruise operator Carnival slumped 4.3% after cutting its annual adjusted profit forecast. Fellow cruise operator Norwegian tumbled 6.9%. The surge in oil prices along with other products such as fertilizer as a result of the Iran war has fanned inflation fears and dampened expectations that the Federal Reserve and other central banks have room to lower interest rates. Money market participants are not pricing in any easing from the U.S. Federal Reserve this year, compared with expectations of two cuts before the conflict broke out, according to CME’s FedWatch Tool. Markets are now pricing in a roughly 25% chance for a hike of at least 25 basis points at the Fed’s October meeting. Philadelphia Fed President Anna Paulson acknowledged the risks to the economy from the war, but did not specify what it meant for monetary policy in the near term. U.S. consumer sentiment eased to a three-month low in March, raising concerns about the economy due to the Middle East war.
Declining issues outnumbered advancers by a 3.38-to-1 ratio on the NYSE and by a 3.62-to-1 ratio on the Nasdaq.
The S&P 500 posted 22 new 52-week highs and 27 new lows while the Nasdaq Composite recorded 25 new highs and 355 new lows.
Volume on U.S. exchanges was 18.13 billion shares, compared with the 20.4 billion average for the full session over the last 20 trading days.
