Market Overview

April, Come She Will? Markets Kick Off Q2 On A Rough Note

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April, Come She Will? Markets Kick Off Q2 On A Rough Note
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After snapping a nine-quarter winning streak in the first quarter of 2018, U.S. stocks stumbled out of the gate in the second quarter as well on Monday.

The Dow plummeted 458 points to close at 23,644.19, down 1.9 percent.

The S&P 500 closed at 2,579.27, down 2.3 percent. The index closed below its 200-day moving average for the first time since June 27, 2016.

The Nasdaq fell 2.7 percent and entered correction territory, closing at 6,870.12

Investors seem increasingly concerned that politics will bring an abrupt end to the nine-year market rally. President Trump once again attacked Amazon.com, Inc. (NASDAQ: AMZN) on Monday. In recent years, Trump has slammed Amazon for its U.S. Postal Service subsidies and what he says is preferential tax treatment. Amazon and its FANG brethren have been the market leaders throughout most of the nine-year rally.

FANG stocks Facebook, Inc. (NASDAQ: FB) and Alphabet, Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) are dealing with their own problems with Washington, as investors fear regulators may soon crash down on the two advertising giants’ use of customer data following Facebook’s Cambridge Analytica scandal.

Trade War Fears Linger

Following Trump’s recent series of tariffs on imported Chinese goods, China has demonstrated it's not afraid of a trade war, slapping its own tariffs on 128 different U.S. products. Investors of U.S. companies that do business overseas are now uneasy about the impacts of a potential trade war.

On Monday, Morgan Stanley analyst Michael Wilson said U.S. stocks are a great value following the sell-off.

“We think many of the risks that have rattled markets of late (inflationary fears, Fed, rolling economic surprise indices, trade concerns, fears of potential regulatory backlash to internet stock leaders, a flattening curve, and rising vol) have been priced fairly and we could see a modest rerating as fundamentals come through in earnings season,” he said.

Price Action

Clearly, investors are not yet convinced the dip is a buying opportunity. Here’s a look at how the market finished a volatile Monday:

  • The SPDR S&P 500 ETF Trust (NYSE: SPY) was down 2.1 percent.
  • The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) was down 2.1 percent.
  • The PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ: QQQ) was down 2.7 percent.
  • The iShares Russell 2000 Index (ETF) (NYSE: IWM) was down 2.1 percent.
  • The BRCL BK IPTH S&P 500 VIX SH FTRS ETN (NYSE: VXX) was up 9.6 percent.
  • The SPDR Gold Trust (NYSE: GLD) was up 1.2 percent.
  • The United States Oil Fund (ETF) (NYSE: USO) was down 2.7 percent.
  • The Bitcoin Investment Trust (OTC: GBTC) was up 6.5 percent.
  • Amazon was down 5.2 percent.
  • Facebook was down 2.8 percent.
  • Alphabet was down 2.3 percent.

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