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The drop in tech stocks continued on Tuesday with Apple and Amazon falling by more than 4 percent in early US trading. Image Credit: AP

Highlights

  • S&P 500 drops more than 1%
  • Sell-off led by top tech stocks like Google, Apple and Amazon
  • Investors weigh the prospects for increased regulation, trade tension and threats to the profit outlook for the large tech firms

The stock market’s gains for 2018 were erased in early US trading on Tuesday, aThe stock market’s gains for 2018 were erased in early US trading on Tuesday, as a sell-off led by giant technology stocks continued.

The renewed declines in the United States came after drops in Asia and Europe.

The tumble of more than 1 percent in the S&P 500 followed a sell-off in high-flying technology stocks like Google, Apple and Amazon in the United States on Monday, as investors weighed the prospects for increased regulation, trade tension and threats to the profit outlook for the large technology firms that exert a large influence on major market indexes.

The pain continued for such companies on Tuesday with Apple and Amazon falling by more than 4 percent in early trading.

But a new area of concern also flared up after the retailer Target reported third-quarter sales and profit that missed Wall Street expectations. Target’s shares dove by more than 10 percent.

The softness in retail shares reflects growing investor concern that the strong American economy — which has so far shrugged off Federal Reserve interest rate hikes and signs of weakness in China and Europe — is likely to face increasing challenges in 2019, as the impact of Federal tax cuts and spending increases diminishes.

Monday’s slide in the United States had already spilled over into Europe and Asia before trading on Wall Street opened on Tuesday.

By early afternoon, European share indexes were all in the red, driven down by technology stocks. The Euro Stoxx 50, an index of eurozone blue-chips, was down more than 1 percent and at its lowest point in about three weeks.

The CAC 40 in France and the DAX in Germany were also down more than 1 percent. Britain’s FTSE 100 had slipped about 0.5 percent.

Concerns about privacy lapses and mismanagement at technology companies weighed on stocks on Monday, adding to broader concerns about the impact of a trade war between the United States and China as well as signs of slowing growth around the globe.

The pessimism continued in the Chinese markets of Shanghai and Shenzhen as the worries that hurt technology stocks in the United States hit stocks in other parts of the world.