Tech Rollover Sinks U.S. Stocks; Bitcoin Falls Below $5,000 as Collapse Continues
U.S. stocks booked huge losses on Monday, as plunging tech shares and wavering risk sentiment dragged the major indexes lower. The crypto bloodbath reached epic proportions Monday, as bitcoin slid below $5,000 for the first time since October 2017.
Stocks Lurch Lower
All of Wall Street’s major indexes headed for sharp losses, with the S&P 500 Index virtually erasing its yearly gain. The large-cap index fell 1.7% to 2,690.73, with nine of 11 primary sectors finishing in the red.
The S&P 500’s information technology component plunged 4%, with software, technology hardware and semiconductors shouldering the heavies loses. Communication services, a partial offshoot of big tech, fell 2.8%.
The tech-heavy Nasdaq Composite Index sold off 3% to close at 7,028.48.
Dow industrials were down across the board, with the Dow 30 index closing down 395.54 points, or 1.6%, to 25,017.68.
Tech Rollover Intensifies
The major tech titans that once led the bull market are buckling under the pressure of disappointing earnings forecasts and slowing global growth. Shares of Apple Inc. (AAPL) fell back into bear market territory on Monday amid reports the company was slashing production orders for its flagship iPhone products.
According to The Wall Street Journal, Apple has cut orders for the iPhone XR, XS and XS Max models by a third, signaling weak demand. The upgrades were unveiled in September around the time Apple was continuing a record-setting surge that culminated in a trillion-dollar market cap. Since reaching those peaks, the iPhone maker has lost more than $200 billion in market value.
The tech rollover on Monday extended far beyond Apple. Netflix Inc. (NFLX), Advanced Micro Devices Inc. (AMD), Facebook Inc. (F) and Amazon.com Inc. (AMZN) all posted major losses.
Plunging tech shares are usually a warning sign that investors are losing confidence in the bull market. The sector was largely responsible for the record-setting bull run that followed the election of Donald Trump in November 2016.
Crypto Carnage Intensifies
Bitcoin and the broader cryptocurrency market headed for new 13-month lows Monday, extending last week’s bearish breakdown. The bitcoin price pierced below $4,900 on Coinbase, levels not seen since October 2017. The leading digital currency is down a whopping 12% on the day and 22% compared with seven days ago. Over the course of the week, its market cap has plunged from $110 billion all the way down to $86.7 billion.
With the exception of XRP and the dollar-backed USDT stablecoin, all major cryptocurrencies in the top-ten posted double-digit losses on Monday. Losses among the majors ranged between 16% and 34% week-on-week. The combined crypto market cap, which includes bitcoin and altcoins, plunged to $164 billion. At the time of writing, the cryptocurrency market cap was worth $166 billion.
There’s no telling just how deep the correction goes, though technical traders have identified $4,800 as a major inflection point for the bitcoin price. The selloff, which appears to be technical in nature, was sparked last week in anticipation of the bitcoin cash hard fork.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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