October is living up to its ominous reputation among stock investors.
Stocks on Wall Street tumbled again Thursday, as choppy early trading gave way to another bout of broad-based selling. The declines were widespread, touching everything from previously highflying tech shares to usually insulated sectors like consumer staples and utilities.
When the dust settled, every sector of the Standard & Poor’s 500 index had dropped, leaving the stock market bench mark down an additional 2.1 percent. That slump followed Wednesday’s 3.3 percent decline, which was the market’s biggest dive in eight months.
So far in October — which looms large in the minds of investors as the month of the 1929 and 1987 crashes — stocks are down 6.4 percent. That puts the month on a pace to be the worst October for stocks since 2008, when they fell nearly 17 percent.
“Today it feels a lot more like there’s just money coming out of the market,” said John Linehan, chief investment officer for equities at T. Rowe Price in Baltimore. “I think there’s a level of anxiety about the market, especially given how far we’ve come.”
Investors who have ridden the nearly decadelong bull market in stocks are now contending with a growing crop of concerns, including rising borrowing costs that could dampen economic growth and growing tensions between the United States and China. Worries about rising interest rates eased briefly early in the day after a report showing muted inflation helped send yields on government bonds lower. The yield on the 10-year Treasury note ended the day just below 3.15 percent, lower than it had been in several days.
But the easing of rates did little to comfort investors who are also worrying about deteriorating relations between Washington and Beijing. On Wednesday, U.S. officials said they had charged a Chinese intelligence official with espionage after he was extradited from Belgium. On Thursday, the Energy Department said it would tighten controls on Chinese imports of civil nuclear technology.
Christine Lagarde, managing director of the International Monetary Fund, warned Thursday that if the tensions between the United States and China continued to escalate, “the global economy would take a significant hit.”
“Our strong recommendation,” Lagarde said at a meeting in Bali, Indonesia, “is to de-escalate those tensions and to work toward a global trade system that is stronger, that is fairer, and that is fit for purpose and fit for the future.”
Reflecting concerns about the global economy, commodity prices also tumbled Thursday, with the decline in oil prices, for example, weighing on shares of energy producers.
Earlier in the day, stocks were hit particularly hard in Asia, where no market was spared in the sweeping sell-off. Stocks in Shanghai, Tokyo, Hong Kong and Seoul, South Korea, dropped 4 percent or more.
Stocks in China have been declining for months amid signs of economic softness and worries about the impact of President Donald Trump’s trade war. Over the weekend, the People’s Bank of China pumped $175 billion into the economy to help shore it up. Worried about the effect of negative information on its citizens, China has censored negative economic news.
Shares also fell in Europe on Thursday, though the declines were less extreme than in the United States or Asia. The region is also vulnerable to a long list of economic risks, including the possibility of a disorderly exit by Britain from the European Union and the potential for Italy to provoke a new eurozone debt crisis.
Italy’s populist government has drafted a spending plan that would defy European budget rules to fulfill election promises. The market interest rates on Italian bonds have spiked as investors worry that the country may not be able to service its debt, which is equivalent to more than 130 percent of annual economic output.
While geopolitical issues have sprung to the fore, subtler shifts in the backdrop of the stock market might be producing outsize reactions. With the bulk of the earnings season about to start on Friday, many American companies have paused their share repurchase programs to comply with blackout periods, potentially worsening stock market swings.
“That’s another level of support that’s sort of gone in this period,” said Marina Severinovsky, an investment strategist at the asset manager Schroders.
More broadly, investors are readjusting to the slow withdrawal of support from central banks — such as the Federal Reserve — which has acted as a tailwind for stocks since the market rally began in March 2009.
The Fed says it will continue to lift interest rates in the face of robust economic growth, despite direct criticism of the policy from Trump in recent days.
The Fed is also starting to significantly shrink its balance sheet, effectively withdrawing some of the money it pumped into the financial system during and after the financial crisis a decade ago.
“I think these are kind of the teething pains for asset markets as we kind of get away from super-easy money,” said Michael Feroli, chief United States economist at JPMorgan Chase.
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