US stock markets slump as volatile week ends with tech selloff
Equity markets suffered another downturn on Friday as tech stocks pummeled after US titans Amazon and Google-parent Alphabet missed key earnings targets.
Geopolitics, Italian debt concerns, and Brexit worries also played a role in a sell-off that swept through Asia and Europe before hitting Wall Street, analysts said.
Fresh hefty losses came at the end of a hugely volatile trading week that has wiped out all of the 2018 gains for some markets.
"Risk aversion is alive and kicking on Friday, as weaker than expected tech earnings trigger the latest stampede and those still buying the dips once again get burned," said Craig Erlam, a senior market analyst at Oanda.
The tech selloff left the Nasdaq down 2.1 percent and the Dow and S&P 500 in negative territory.
"Tech companies have raised the bar so high in recent years that the numbers reported by Amazon and Alphabet just weren't quite spectacular enough, not at a time when investors are a nervous wreck and fleeing for safety at the first sign of danger," said Erlam.
The earnings reports added to already "skittish global sentiment," said analysts at Charles Schwab, adding that it overshadowed earlier news of stronger-than-expected US growth in the third quarter.
The euro recovered against the dollar after posting a fresh two-month low on Thursday amid concerns over Italy's debt pile.
After US markets closed, rating agency S&P downgraded its outlook for Italy's sovereign debt but left its credit rating untouched, upping the pressure on Rome amid a stand-off with Brussels over its budget.
"The negative outlook reflects the risk that the government's decision to further increase public borrowing -- besides exacerbating Italy's already weak budgetary position -- will stifle the incipient recovery of the private sector," S&P said in a statement.
'Dead cat bounce'
Following losses at the start of the week, stock markets showed signs of recovery on Thursday before diving once more ahead of the weekend break.
"Any hope that Thursday's recovery was anything more than a dead cat bounce was short-lived," said Erlam.
Amazon and Alphabet reported big jumps in quarterly profit but Amazon's sales forecast for the critical holiday-shopping quarter disappointed analysts and Alphabet's quarterly revenues also lagged forecasts.
Amazon shares plummeted 7.8 percent while Alphabet dropped 2.2 percent.
Other large technology companies also were under pressure: Apple shed 1.6 percent, Facebook 3.7 percent, and Netflix 4.2 percent.
"Investors expect companies to be positive on the top line, bottom line, and guidance," said Quincy Krosby, chief market strategist at Prudential Financial.
"Companies have to come with all three, otherwise the market is prepared to sell."