The bloodletting on the stock market continued Thursday.
The Nasdaq, in particular, has gotten rocked in recent days. Investors have bolted from the index, which contains many tech stocks because they are concerned about holding some of the market’s riskiest stocks in a downturn. A proxy for the tech sector had its sharpest plunge in seven years on Wednesday.
The S&P 500 was on pace for its sixth straight decline, something that hasn’t happened since just before President Donald Trump’s election nearly two years ago. And the Nasdaq has already plunged 8% this month.
“Halloween started early this month for investors,” Ed Yardeni, president of investment advisory firm Yardeni Research, wrote to clients.
Tech stocks including Alibaba (BABA), Facebook (FB) and Twitter (TWTR) are all set to slide at the open. Square (SQ) plunged 9% in premarket trading after announcing the departure of its chief financial officer.
Stocks have turned sharply south because investors are increasingly concerned about rising interest rates. As the Federal Reserve raises rates, investors have been getting out of bonds, driving down their price and driving up their yields. Suddenly, the return on bonds has become competitive with some stocks — particularly risky tech stocks.
Rising interest rates also increase borrowing costs for households and businesses, eating into corporate profits. America’s increasing debt load, a trade war with China and a slowing global economy have also unnerved investors.
Wednesday’s “rout has shaken investor confidence,” Nicholas Colas, co-founder of DataTrek Research, wrote to clients. “That will take time to rebuild.”
The Dow plunged 832 points, or 3.2%, on Wednesday. Tech stocks took a beating, sending the Nasdaq tumbling 4% — its worst day since the Brexit referendum of June 2016.
That dragged down stock indexes in the United Kingdom, Germany and France on Thursday, all of which fell more than 1%. Benchmark indexes in Shanghai and Tokyo closed down 5.2% and almost 4%, respectively. Hong Kong’s market was down over 3%.
But Yardeni is optimistic the market will rebound because corporate profits are robust and no recession is in sight.
“We remain bullish on the outlook for earnings, and expect the market to recover and make new highs going into next year,” Yardeni wrote.