Stocks tanked on Monday, pushing the S&P 500 to a new low for the year amid growing concerns that the Federal Reserve’s plan to raise interest rates could be too much for the economy and stock market to handle.
The S&P 500 fell as much as 2.5 percent to 2,530.54, surpassing its February intraday low of 2,532.69. The broad market index finished the session down 2 percent at 2,545.94, its lowest close for the year. The Dow Jones Industrial Average lost 507.53 points to close at 23,592.98, bringing its two-day losses to more than 1,000 points. Shares of Amazon and Goldman Sachs led the declines.
The Dow and S&P 500, which are both in corrections, are on track for their worst December performance since the Great Depression in 1931, down more than 7 percent so far for the month. The S&P 500 is now in the red for 2018 by 4 percent.
The tech-heavy Nasdaq Composite dropped 2.2 percent to finish the day at 6,753.73 as Microsoft dropped 2.9 percent. The Russell 2000 — which tracks the performance of smaller companies — entered a bear market, down 20 percent from its 52-week high.
DoubleLine Capital CEO Jeffrey Gundlach said Monday that he “absolutely” believes the S&P 500 will go below the lows that the index hit early in 2018.
All 30 stocks in the Dow and all 11 sectors in the S&P 500 posted losses on Monday.
The Cboe Volatility Index — one of Wall Street’s favorite gauges of market fear — rose above 25 and volume for the stock market was heavier than usual.
The Fed is expected to hike its benchmark overnight lending rate for a fourth and final time of 2018 on Wednesday. While fears of rising interest rates and an ambitious central bank have spooked markets throughout 2018, such concerns have heightened over the past month as inflation and growth expectations recede.
President Trump doubled down on his criticism of the Fed’s rate hiking path on Monday, lambasting the central bank for “even considering” another rate hike just days before its final meeting of the year.
“With just ten trading sessions left for stocks in 2018 the chance of a Santa Claus rally appears less than slim,” John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, wrote Monday. “Sentiment remains sour toward stocks even as fundamentals and relatively cheap valuations leave stocks poised to move higher in the New Year.”
Recent economic data have reignited worries of economic slowdown around the globe and kept a lid on stock returns. Homebuilder sentiment fell to its lowest level since May 2015 in December as potential buyers delay purchasing new homes despite a pullback in mortgage rates in the past month. Sentiment declined four points in December to 56, well below December 2017’s print of 74, according to the National Association of Home Builders/Wells Fargo Housing Market Index, released Monday.
New York manufacturers reported on Monday that business activity is still expanding, but growth slower much more than expected in December. The Empire State Manufacturing Survey’s general business conditions index, aggregated by the Federal Reserve Bank of New York, fell to 10.9 from 23.3 in November, falling short the 20.6 print expected by economists polled by Refinitiv.
The Dow fell nearly 500 points and the S&P 500 closed down 1.9 percent on Friday to 2,599.95 after China reported industrial output and retail sales growth numbers for November that missed expectations.
The company is under fire for its role in helping raise $6.5 billion through three bond offerings for 1Malaysia Development Bhd (1MDB), which is the subject of investigations in at least six countries.
Tech favorites of the bull market got hit hard on Monday with Amazon losing more than 4 percent. Alphabet tanked by 2 percent.
Very few stocks and sectors gained on Monday, even defensive utilities and staples were mostly in the red.
A.I. industry suffers from deep gender gap, World Economic Forum says
Artificial intelligence has permeated the technology universe with the promise of disrupting every industry, from health care and retail to transportation.
But a new report from the World Economic Forum suggests that the market developing around AI has certain problems that look a lot like the rest of the corporate world.
The WEF report released on Monday found that the AI workforce in the U.S. has a dramatic gender gap, with less than one-fourth of roles in the industry being filled by women.
“It is absolutely crucial that those people who create AI are representative of the population as a whole,” said Kay Firth-Butterfield, WEF’s head of artificial intelligence and machine learning.
Firth-Butterfield said that bias can enter the coding process, so a lack of diversity means “we’re not actually reflecting the population and we have a huge problem.”
The analysis found that the AI gender gap is three times larger than other industry talent pools, and women in AI are less likely to be positioned in high-profile senior roles.
In 2016, Microsoft released a chatbot named “Tay” on Twitter as an experiment in conversational learning. The experiment quickly ran into problems as Twitter users started tweeting at the bot with misogynistic and racist comments, and “Tay” started repeating that sentiment back to users. More recently, Google released a predictive text feature within Gmail where the algorithm made biased assumptions referring to a nurse with female pronouns. Google eventually stopped the feature from suggesting pronouns.
Programmers “are replicating the fact that people who take calls in call centers tend to be women but we could create a different world with AI if we had more diverse teams creating [it],” she said.
Not all the benefits of diversity are immediately obvious, but the report says that changing the ratio will require proactive measures.
“When you bring more people into the field you get more creative outcomes,” said Tess Posner, CEO of AI4All, a non-profit working to increase diversity in fields including artificial intelligence.
Firth-Butterfield and Posner both argue that companies with greater diversity perform better.
“We see that diversity improves innovation, and the technology itself,” Posner said. If people from a variety of backgrounds are building AI systems, “it will better reflect society,” she said.