Stock Market Losses Pile Up As Nasdaq Plunges 3.5%; Now This Sector Crumbles

The stock market continued to melt down in afternoon trading as the Nasdaq’s losses exceeded 3% and indexes traded around session lows.

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Energy stocks, which had been holding up, fell broadly and damaged one of the few pockets of strength. But selling was broad, with decliners beating advancers by more than 7-to-1 on the NYSE and by about 9-to-2 on the Nasdaq.

The Nasdaq plunged 3.5% as the technology sector lost 2.7% at midday. Microsoft (MSFT) and Nvidia (NVDA) fell to their lowest levels since last June. Apple (AAPL) is nearing its March 14 low. The Nasdaq remains in a bear market, down more than 27% from its Nov. 22 peak.

The S&P 500 slid 2.7% and undercut its May 2 low of 4062. With that, the index made new lows for its correction and any hopes of a rally attempt are gone for now.

The Dow Jones Industrial Average fell 1.7%. Small caps also took big losses as the Russell 2000 tumbled 3.7%.

Inflation Expectations Hit Stock Market

Volume rose on the Nasdaq and NYSE compared with the same time on Friday.

Edward Moya, senior market analyst at Oanda, said in a note that stocks extended declines after the New York Fed survey showed a jump in longer-term inflation expectations. The report, he added, fueled fears of weaker growth that could likely lead to a recession. The inflation expectations from three years from now increased from 3.7% to 3.9%. The one-year inflation expectation fell from 6.6% to 6.3%. ​ ​

Transportation was another sector hurting, down more than 3%. Airline and shipping industry groups fell more than 4%. In a defensive stock market, Consumer Staples Select Sector SPDR (XLP) climbed 0.3%. Among IBD industry groups, packaged foods, cleaning products and grocery stores were today’s best performing.

Energy Select Sector SPDR (XLE) plunged 5.6% and sank near its 50-day moving average before paring a bit of the day’s losses. The slide came as the price of U.S. crude oil fell more than 5% to $104.05 per barrel.

Oil prices fell on new data from China showing a slowdown in exports. Chinese exports rose 3.9% from a year earlier in April, a big drop-off from 14.7% growth a month earlier. It was the weakest increase in nearly two years. Covid lockdowns in China are hurting the country’s economic output and straining global supply chains.

IBD 50 Index Tumbles 5.5% As Energy, Fertilizer Stocks Fall

The Innovator IBD 50 ETF (FFTY) sold off 5.5% as energy stocks — many off by more than 5% — weighed it down. Boise Cascade (BCC) and C.H. Robinson (CHRW) were the only stocks higher in the IBD 50, which sank to a two-year low.

Bunge (BG), a maker of fertilizer and other agricultural products, fell below its 50-day moving average for the first time since it broke out of a base on Jan. 7. Nutrien (NTR) made similarly bearish action and was kicked out of IBD Leaderboard.

Oil explorer Canadian Natural Resources (CNQ) fell deeper below its 50-day line. Comstock Resources (CRK) also made its first break of the 50-day average, according to IBD MarketSmith. Flex LNG (FLNG) fell below the 50-day line and is back near its 25.51 buy point.

Outside the IBD 50, other stock market leaders struggling with their 50-day lines included Matador Resources (MTDR), Viper Energy Partners (VNOM) and Darling Ingredients (DAR).

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