The Dow slipped more than 280 points Tuesday, continuing a rare stock market slump.
Jeff Bezos, Warren Buffett and Jamie Dimon’s plan to get into the health insurance business sent health care companies tumbling. UnitedHealth dropped 3%, CVS was off 5%, and Walgreens shed 3%.
The Wall Street Journal also reported that Apple will make 20 million fewer iPhone X’s this coming quarter than it had originally planned. The iPhone X, Apple’s newest and most expensive phone, hit stores in November. Apple will give investors an update on sales Thursday during its year-end earnings report.
Apple dropped 1% early Tuesday.
The market selloff so far is just minor turbulence in a relentless climb. The Dow closed down 177 points Monday, its worst day since September.
If the Dow closes down by more than 100 points Tuesday, it will be the first time since April 19 and only the third time since the November 2016 election that the Dow has fallen triple digits two sessions in a row.
“With higher interest rates globally and the State Of The Union speech on tap tonight, this could simply be some end of month jockeying,” said Ryan Detrick, senior market strategist with LPL Research.
The Dow is up 8,000 points since President Trump’s election. A growing global economy, strong corporate earnings and a wave of consumer confidence are pushing stocks higher. Congress’ tax cuts and Trump’s deregulation agenda have investors and CEOs feeling optimistic.
There are still warning signs that the market could be entering a long-overdue pullback, which some analysts believe would be a healthy cool down.
The VIX, Wall Street’s fear gauge, hit its highest level since August on Monday.
The bond market is unnerving stock investors. On Monday, the 10-year Treasury yield climbed above 2.7% to the highest level in nearly four years. Yields move in the opposite direction of price.
While bond rates remain historically low, a rapid rise above 3% could spook Wall Street.
If trouble comes to the market, many analysts think it will start in bonds. If investors sell bonds, their interest rates will rise sharply from their current historic lows. And when investors can get better returns from bonds, risky stocks start to look less attractive.
The Federal Reserve’s planned interest rate hikes could push higher yields. The Fed begins a two-day policy meeting in Washington Tuesday.
“We have become an asset price dependent economy and one addicted to artificially low rates,” Bleakley Advisory Group’s Peter Boockvar wrote in a note Tuesday.
Inflation fears could also lead to a selloff because investors’ 10-year Treasury notes wouldn’t be as valuable in the future.
