A Horror Week for the Dow Has Investors Begging for Trump Respite

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March 23, 2018 8:35 pm Published by

Spring has sprung — just not in U.S. stocks, where a harrowing week has walloped traders with echoes of February’s correction.

In the past five years, there have been only two other stretches with losses of this magnitude. The S&P 500 Index is down 6 percent. And the picture looks just as bad for the Dow Jones Industrial Average, which sank to a four-month low by the Friday close. Both indexes suffered their steepest weekly drop in more than two years.

Equities are now teetering near — and for blue chips, below — levels seen at the worst point in February’s volatility-fueled meltdown. At the epicenter this time is U.S. President Donald Trump, with his China tariffs driving Boeing Co. down more than 5 percent in a single session on Thursday and losses rippling across industries from technology to banks.

“Investors that have for months relied on Trump’s pro-business rhetoric are now caught off guard,” said Matt Maley, equity strategist at Miller Tabak & Co. “Trade tariffs are a big change and China’s response can even get stronger. There isn’t too much to be optimistic about: investors’ concern associated with Trump’s tariffs isn’t going to be resolved neither next week nor the week after.”

Consider this as a worrying sign of investor fragility: the S&P 500 has closed lower than the midpoint of its daily range for 10 straight days, the longest stretch since at least 1982. That suggests traders are finding reasons to dump shares in the afternoon rather than buy dips.

Friday Slide

Friday was a case in point. The S&P 500 fluctuated for most of the morning before sinking as much as 2.2 percent in the afternoon, coming within 0.2 percent of its Feb. 8 closing low. The Cboe Volatility Index jumped more than 7 percent to the highest level since early March.