With some of the Dow’s most popular technology stocks under pressure and a steep decline in oil prices, the Dow Jones Industrial Average dropped 178.74 points on Black Friday, the S&P 500 dropped 0.65 percent, and the Nasdaq Composite dropped 0.5 percent. It was the worst Black Friday performance for the Dow and S&P since 2010, and the worst for the Nasdaq since 2011. For the week, all three major indexes dropped more than 3 percent, their biggest loss during Thanksgiving week since 2011, according to CNBC.
Mark Esposito, CEO of Esposito Securities, blamed slowed earnings growth, higher market volatility, and slowing economic growth for the downward trend.
“I don’t think the bull run is over but I think we’re close to the end of the cycle,” Esposito said. “It feels a bit unsafe.”
Facebook, Apple, Amazon, Netflix, and Alphabet (the parent company of Google) all fell again on Friday, after each posted at least 5 percent losses on Wednesday. Apple has now fallen more than 25 percent since hitting an all-time high earlier this year, and looks to fall even further after announcing that they will be cutting the price of the iPhone XR in Japan due to lackluster sales.
— MarketWatch (@MarketWatch) November 23, 2018
Friday’s market closed early after being closed on Thursday in observance of the Thanksgiving holiday.
Dollar-denominated assets are often closely tied to oil prices, and the plummeting price of crude oil is placing additional pressure on the stock market. West Texas Intermediate futures have bottomed out at $51.03 per barrel. The drop in crude prices sent the Energy Select Sector SPDR Fund (XLE), which tracks the energy sector for the S&P 500, to a drop of over 3 percent.
“Tech stocks are under pressure once again but more troubling is that oil prices are collapsing,” said Peter Cardillo, the Chief Market Economist at Spartan Capital Securities. “Lower oil prices are not a good sight for the economy. OPEC has indicated they’re going to cut (production), but that’s not helping. That’s a bad sign.”
The decline in both stock and oil prices comes at a time of increasing tension between the U.S. and China over trade. The U.S. has imposed billions of dollars of tariffs on Chinese goods under the current administration’s protectionist policies, and China has responded in kind. The leaders of both nations are set to meet at the G-20 Summit in Argentina next month, but few economists expect any resolution to the standoff. China’s major stock indexes have also experienced a 2 to 4 percent decline during the looming trade war.