U.S. stocks slumped again Thursday as investors continued to sell shares of technology and internet companies, industrial firms and companies that rely on consumer spending.
Several industrial companies tumbled after releasing weak quarterly reports, and European stocks also fell as European Union leaders criticized Italy's spending plans.
At the start of trading, stocks took small losses as bond prices fell and interest rates surged. The gain in interest rates didn't last, but stocks turned lower, and by the end of the day they had wiped away most of their big rally Tuesday.
Stocks have skidded over the last two weeks, and there are signs investors are worried about future economic growth. The Standard & Poor’s 500 index has fallen 5.5% in volatile trading since Oct. 3, and technology, industrial and energy companies have taken some of the biggest losses. Those companies tend to do better when the economy is growing more quickly and consumers and businesses have more money to spend.
“If uncertainty starts to creep in around trade or growth, that could be a risk to the recovery in corporate spending,” said Jill Carey Hall, senior U.S. equity strategist for Bank of America Merrill Lynch. She said investors will monitor company reports over the next few weeks to learn about their business forecasts and plans.
European leaders expressed concern about the Italian government's proposal to increase spending and widen its budget deficit. European Union budget chief Pierre Moscovici told Italy's economic minister that the new government's plans make it unlikely that Italy will be able to reduce its public debt to levels agreed upon by EU countries.
The S&P 500 index slid 40.43 points, or 1.4%, to 2,768.78. The Dow Jones industrial average declined 327.23 points, or 1.3%, to 25,379.45. It was down as much as 470 points earlier in the day.
The Nasdaq composite sank 157.56 points, or 2.1%, to 7,485.14. The Russell 2000 index of smaller-company stocks declined 28.85 points, or 1.8%, to 1,560.75.
Among industrial companies, aircraft maker Textron sank 11.3% to $57.49 after its profit and sales fell far short of analyst forecasts. The company said its aerospace and defense business and its industrial business both weakened. Tool and diagnostic equipment company Snap-on slid 9.6% to $151.47 after it posted lower revenue than analysts expected.
Industrial and basic materials companies have taken bigger losses than any other part of the market over the last month. One reason is that investors feel those firms are especially vulnerable in the U.S.-China trade war. They're already dealing with tariffs on imported steel and aluminum, which have increased their costs and can hurt sales. If the global economy slows, manufacturing and construction could slow too.
Amazon slid 3.3% to $1,770.72, pulling down retailers. Apple fell 2.3% to $216.02.
Video game maker Activision Blizzard dropped 8.3% to $71.81 after it announced early sales numbers from “Call of Duty: Black Ops 4.”
The stocks that have held up best recently include utility and household products companies. They don't depend as much on economic growth, as consumers are likely to use about the same amount of electricity and buy the same amount of toilet paper or cereal regardless of the state of the economy.
The recent gains for those stocks is notable because the market's slump began when interest rates started rising quickly. Defensive stocks often struggle when interest rates are rising. The companies are known for paying big dividends, similar to bonds, so when rates rise, investors often sell those stocks and buy bonds instead.
Carey Hall said that if the economy keeps growing and interest rates rise, investors might not want to choose between growth-oriented stocks and defensive ones. She said companies in the middle might do best, including some industrials, banks and older tech firms. Those companies could still benefit if the economy keeps growing, but they also have enough financial flexibility to raise their dividends to outpace rising interest rates.
Bond prices edged down. The yield on the 10-year Treasury note rose to 3.18% from 3.17%.
The price of U.S. crude oil slid 1.6% to $68.65 a barrel, its lowest in a month. Brent crude, the international standard, fell 0.9% to $79.29 a barrel.
Wholesale gasoline fell 1.4% to $1.89 a gallon. Heating oil fell 0.7% to $2.29 a gallon. Natural gas dropped 3.7% to $3.20 per 1,000 cubic feet.
Gold rose 0.2% to $1,230.10 an ounce. Silver fell 0.4% to $14.60 an ounce. Copper fell 1.1% to $2.75 a pound.
The dollar fell to 112.20 yen from 112.49 yen. The euro fell to $1.1465 from $1.1507.