Follow and listen to our podcast

StashLearn
Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Money News

Why Did the Market Drop (Again)? Trump, Tariffs, and Tech

April 02, 2018

  • Markets plunged on Monday, with some indexes experiencing corrections
  • Tech stocks led the markets lower as investors sold off in the sector
  • Volatility is a normal part of markets
2 min read

What happened to markets today? We can sum it up in three words: Trump, tariffs, and tech stocks.

Major indexes fell into correction territory again on Monday, led this time by tech stocks.

The Dow Jones Industrial Average fell 700 points by mid-afternoon. Meanwhile, two other key indexes the S and P 500 and the tech-heavy Nasdaq fell 3.1% and 3.5% respectively.

It’s the third time this year that major indexes have experienced steep drops in a single day.

FANG companies got declawed

Stocks of the so-called FANG companies–Facebook, Amazon, Netflix, and Google–were among the hardest hit. Collectively, those companies have lost $324 billion over the last two weeks, according to reports. But it wasn’t just the large market leaders in tech, companies including social media app Snapchat also suffered losses.

Facebook has been facing pressure following news that it leaked personal data from 50 million users to a firm called Cambridge Analytica, which reportedly gathered the information to create psychological profiles of voters during the 2016 elections, without user permission.

Similarly, Amazon has been the subject of President Trump’s wrath in recent days, as the president has made erroneous claims on Twitter about the company’s tax filing status and use of the U.S. Postal Service for parcel deliveries. While the online retailer has been having a tough day, until recently its stock has been up more than 50% in the past year, according to Bloomberg.

And in related news, chip maker Intel, which provides microchips to some of the largest tech companies around, experienced a steep sell off, after news reports said Apple would switch from Intel chips to microprocessors it manufactures itself, by 2020.

Apple is reportedly one of Intel’s biggest sources of revenue.

Is it “Groundhog Day?”

There have been two other stock big sell-offs over the past few months. In February, for example, fears about inflation led to the steepest decline markets had experienced in more than a year.

Stocks of the so-called FANG companies–Facebook, Amazon, Netflix, and Google–were among the hardest hit.

And in late March, fears about a trade war with China sparked a smaller sell-off in the major indexes. On Monday, China announced it would hit back against $60 billion of U.S. tariffs on its own products, with tariffs on 128 U.S. products, including farm and agricultural exports.

Good to know: April is the beginning of the second quarter, which means earnings are due for most public companies for their first quarter. Many of the leading tech companies are expected to report strong earnings, according to some market analysts.

Is this kind of volatility normal?

Yup. Volatility is considered a normal part of market behavior–and corrections aren’t all that unusual.

In fact, according to some experts, volatility tends to appear in markets in clusters. That means large market swings tend to follow each other, just as small market movements do.

Things to think about when markets go down

Consider turning on Auto-Stash and let the power of dollar-cost averaging do its work.

Keep on investing small amounts of money on a regular basis into your diversified Stash portfolio. You’ll automatically capture market highs and purchase more of your investment when it dips.

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

Next for you
The Market Dropped. Now What Do I Do?

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
love and money politics Technology Careers pop culture
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.