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Stock market decline this week erases 2018 gains

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Stock futures this morning suggested there would be gains today on Wall Street after a second consecutive selloff on Tuesday threatened a six-year streak of Thanksgiving week gains.

The Standard & Poor’s 500 has fallen 3.4 percent this week and was 9.9 percent below its Sept. 20 record at closing on Tuesday, though it has climbed every Thanksgiving week going back to 2012, according The Wall Street Journal, quoting Dow Jones Market Data.

The Nasdaq fell 4.7 percent through Monday and Tuesday, putting it 15 percent below its August record.

The most recent drop, which began with a tech stock selloff and spread to the overall market, erased the 2018 gains of the Dow and broad S&P 500 stock index, according to USA Today.

Facebook, Amazon, Alphabet, Apple and Netflix have shed more than $800 billion in market value since the end of August, the fallout from slowing growth and regulatory scrutiny. Oil dropped 6.8 percent, falling deeper into bear territory, according to The New York Times.

The markets might appear incongruous with a strong economy, but stocks can act as an early warning system by picking up subtle changes in markets before they appear in economic data.

Stocks have taken a hit over the last few weeks because of rising costs concerns — “a sign that President Trump’s global trade battles may be starting to take a toll and that higher wages are cutting into profits,” wrote The New York Times.

The sell-off doesn’t portend a recession, but the drop could suggest that “a hefty dose of fiscal stimulus, in the form of tax cuts, allowed the United States to shake off growth worries” in the rest of the world, wrote the Times. That stimulus won’t have the same weight next year, leaving the economy and stocks more vulnerable to risks, including a slowing global economy and rate increases by the Federal Reserve.

But there was still strong economic data in this morning’s reports. Strong growth and deep corporate tax cuts have supercharged corporate profits; third-quarter earnings for companies in the S&P 500 are expected to be up more than 28 percent from a year earlier.

Investors are still holding out hope that positive trade news or a bump in upcoming retail earnings will improve the outlook in a week that includes the largest shopping day of the year, Black Friday. History shows that the S&P 500 has risen 85 percent of the time on the Tuesday through Friday of Thanksgiving week since 1950, said The Wall Street Journal.

At around 7 a.m. ET, Dow Jones Industrial Average futures indicated a gain of about 89 points. Futures on the S&P 500 and Nasdaq 100 were also relatively upbeat Wednesday morning, according to CNBC.

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