Investors Exiting Tech, Playing Defense
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How did U.S. major averages perform during this volatile week?
With your money briefing, I'm Charlie Turner in New York for The Wall Street Journal. Friday was another volatile day for the U.S. stock market, and it ended with a mixed showing for the major averages. The Dow Jones Industrials closed up 123 points at 25,413. The Nasdaq Composite lost 11 points, and the S&P 500 gained 6. However, it was a tough week for the markets. Both the Dow and Nasdaq lost about 2.2 percent, and the S&P lost 1.6 percent. Here to help us recap the week is Wall Street Journal Markets reporter Mike Worsthorn. Mike, were there a lot of growth concerns this week? It seemed like the forecasts were for slow growth or contraction overseas, while it's generally more upbeat in the U.S.
In China and Germany specifically, there were data points that freaked investors out, making them more concerned that obviously as we think about sort of the storyline last year in 2017 that all these global economies are growing together, that's all unraveled. And we're getting further and further evidence as the data catches up to where things are now. So in China, you did see business activity sort of overall mix in October, and that just overall contributed to this very negative sentiment. Germany as well, its economy shrank for the first time in three and a half years, adding to that concerns that over in Europe, they're not expanding nearly at the rate as they should be. And in the U.S. on Friday, there was even some economic data that shows that we're still growing, but industrial output came in below analysts' expectations.
Household debt is at an all-time high and continues to climb since the financial crisis. And it's really just given investors a reason to pause again.
And I imagine that Brexit is a big problem for the Eurozone and, by extension, people here in the U.S.
There was a lot of volatility. all throughout European stocks throughout the week as the news about the deal came out and then the resignations. And for a lot of investors, there's still a lot of questions over what this final Brexit deal will look like. So for the time being, they're just bracing themselves for further volatility, especially if there's any signs as to whether or not Theresa May's government is going to enter some sort of crisis over all this.
There doesn't seem like there was very much impact from a statement, I guess, President Trump made to reporters indicating that there were hopeful signs on the trade front between the U.S. and China.
It was interesting because right when that statement first came out on Friday, it was around 1230 in the afternoon. You saw the Dow Jones Industrial Average, the S&P 500, all of them pulled themselves out of negative territory. They rose. The S&P, I believe, was up as much as 0.6%. But the gains were very much short-lived. And that was just because the market was way more fixated on some of the weak earnings that had come out before the open. So while trade optimism is something that's going to really be needed for the markets to move higher, the markets are pretty doubtful of anything that's just said sort of off the cuff or to reporters without a firm deal in their hands around trade.
Lest we bury the lead here, what about technology stocks? We had on Friday NVIDIA pulling the chip makers down, and also there was news regarding Facebook.
Facebook's had a particularly painful week, a lot of it having to do with the New York Times story that came out, but they deepened their losses. I mean, for tech overall, it's been another punishing week, and it's really continued a sell-off that started yesterday. in early October as investors really rethink the valuations of these very high-growth, lofty companies. For a lot of them, they totally understand that companies like Facebook, Alphabet, Netflix, they'll continue to grow, but the question is, how fast can they really grow? So the earnings that have come out, and NVIDIA was the latest one to say this, show that at least in the fourth quarter of this year, sales across the board are slowing.
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