Wall Street ended a rather difficult week during the most recent five-day span on a solid up note, with back-to-back gains to end that stretch. Behind the late rally was optimism on trade with China, as the President indicated that some sort of thaw in our icy economic relationship with that fast-growing giant might be in the works. However, over the weekend, a rather harder line was taken by the Vice President suggesting that no reductions in tariffs would result unless China mended its ways. There is yet no positive response from China on that count.

So, that brief optimism quickly faded yesterday morning. To make matters worse, there were new concerns in the tech space about upcoming demand and other issues. In response, some of the high-profile technology giants took it on the chin from the opening bell. The fact that earnings season is just about in the rearview mirror hasn't helped either, as there is little in the way of offsetting positive developments that can stabilize things down on the Street. Thus, equities fell from the opening bell.

In fact, after the first hour of trading, the Dow Jones Industrial Average was off by just over 240 points and the NASDAQ, where some of these erstwhile high flyers in the technology sector are domiciled, was down by 130 points, or close to 2%. The market then went back and forth for a while, before another down leg ensued as we reached the noon hour in New York. At that time, the Dow, with some late-morning selling had fallen to a morning worst setback of about 400 points.

Steep declines also were recorded by the S&P 500 Index, where a 43-point drop translated into a 1.6% selloff. That matched the pullback in the Dow from a percentage point. However, the steeper loss in the NASDAQ of 182 points worked out to a 2.5% loss. Another sharp decline in Apple (AAPL – Free Apple Stock Report) shares on worries about iPhone demand was the headline mover again. Technology, the big gainer in 2017 and to date in 2018, has now suffered better than a 10% slide in recent weeks, pushing that suddenly beleaguered sector into correction territory.

The market then continued its losing ways as the afternoon got under way, with the Dow's descent reaching some 470 points just after the clock struck noon on the East Coast. The NASDAQ's drop passed the 200-point mark at that juncture. And the selling continued into the afternoon, with the Dow at one point tumbling by 513 points. And that composite wasn't the worst of the falloff, as the NASDAQ dropped by 3%, falling more than 235 points at the session's low point. It was a full-scale debacle.

The selling largely would continue into the close, although the final tallies would show that the worst levels of the day were not violated, as a modicum of bargain hunting did take place over the final minutes. At the bell, the Dow would be off by 396 points; the S&P 500 would descend 46 points; and the NASDAQ, with Apple and Amazon (AMZN) being under intense selling pressure all session long. Also tumbling some 2% was the small-cap Russell 2000, which shed 31 points.

Now, a new day begins, and following yesterday' sharp drop, we see that the major indexes in Asia were materially lower overnight. In Europe, meantime, the key bourses are now tracking downward, as well under pressure from declines in technology stocks. In other markets, Treasury note yields, which fell yesterday, are down again so far this morning, and oil prices are relatively flat. Finally, the U.S. equity futures are showing early losses with the tech stocks suggesting fresh declines.

– Harvey S. Katz, CFA

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.