Consumer staples still suffer — but the damage is less severe than in other areas. That sector loses 1.6 percent on average. Healthcare is the second best performer of the group, losing only 5.2 percent on average, followed by healthcare, which tends to lose 5 percent.
Traders are already starting to give up on high-flying tech stocks, fueled by concerns over regulation and high valuations. The Nasdaq Composite entered bear market territory Thursday for the first time since October 2011. The index, which hasn’t closed in bear market levels since August 2009, fell more than 2 percent Thursday and remains more than 20 percent off its recent high.
Investors had bought up tech stocks in the past two years amid a swell in demand for chips, and accelerating revenues at Facebook and Amazon.
Until now, December has never been the S&P 500′s worst month of the year. Stocks continued to fall Thursday after the Federal Reserve raised benchmark interest rates and said that it would continue to let its balance sheet shrink at the current pace.
Fears of a government shutdown also weighed on stocks. Markets are already pricing in a downbeat 2019 thanks to rising interest rates and fears over global growth.
Major investment firms are citing similar trends in their outlooks for next year.
In its 2019 outlook report, J.P. Morgan said the “pessimism has also spilled into retail sentiment.” Based on 13F filings, the firm said non-institutional investors are underweight Tech and overweight defensive Staples and Utilities.
Schwab’s team of market experts is also preparing for a downturn and sees “U.S. economic growth to slow in 2019, with the risk of a recession rising.”
contributed to this report.