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Bear Market is a term that sends fear into Wall Street and investors. What does it mean? And how does it affect both Wall Street and Main Street? Adam Shell explains.

epa07086825 Traders work on the floor of the New York Stock Exchange in New York, New York, USA, on 11 October 2018. The Dow Jones industrial average lost nearly 550 points today. EPA-EFE/JUSTIN LANE ORG XMIT: JLX21(Photo: JUSTIN LANE, EPA-EFE)

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The wave of selling on Wall Street intensified Tuesday, with big losses in popular tech stocks extending the recent stock market slide and erasing the 2018 gains of the Dow, Nasdaq composite and broad S&P 500 stock index.

The selling pressure was again focused in the hard-hit technology sector, where shares of all the so-called FAANG stocks -- Facebook, Apple, Amazon, Netflix and Google parent Alphabet -- were all lower. All five stocks, which had been leading the market higher during the bull market, are now down more than 20 percent from their highs in the past year, which puts them in bear-market territory. The biggest decliners are Facebook, which has been hounded by data privacy issues, down more than 40 percent from its recent peak, and Netflix, which is off nearly 38 percent.

"The selloff is a continuation of the rotation away from high flying tech names and ongoing worries about the U.S.-China trade (dispute)," says Nick Sargen, senior investment advisor for Fort Washington Investment Advisors. 

In early trading, the Dow Jones industrial average was down as much as 500 points and trading below where it finished 2017. The Standard & Poor's 500 was 1.9 percent lower, pushing it into negative territory for the year. The large-company stock index, considered a proxy for the health of the broader market, dipped 10 percent below its September 20 high, putting it back in so-called "correction territory."

The technology-dominated Nasdaq was down 2.6 percent early Tuesday, giving up its gains for the year.

Heading into Tuesday, the Dow was 6.8 percent off its recent high, the S&P 500 was 8.2 percent below its recent peak and the Nasdaq was more than 13 percent off its record high.

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After a long period where investors made money by buying stocks after a sizable swoon -- a strategy known as "buying the dips" -- that strategy is no longer working, adds Joe Quinlan, chief market strategist at U.S. Trust.

"Investors are not buying the dips," he told USA TODAY.

The market's losses mount as a long period of low interest rates comes to a close, as the U.S. central bank pushes rates higher in an attempt to get them back to more normal levels. Higher rates result in borrowing costs on things ranging from homes and cars to rise. 

Investors are also grappling with concerns that the economy, which has been performing well, has already seen its best days. 

 

 

 

 

 

Source : https://www.usatoday.com/story/money/2018/11/20/dow-selloff-erases-2018-gains/2064956002/

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