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Stocks Mark New Lows; Leading Stocks Enter Bear Market

Stocks pared losses Friday, after losses left the S&P 500 more than 10% off its September high, and leading stocks sank into what would be considered a bear market.




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Major indexes made new lows for the current correction. That ended hopes that Thursday’s bounce could be the start of a new rally attempt. A rebound attempt faded after 1 p.m. ET.

The Nasdaq composite led losses, down 1.7% but off a session low that took the composite down 3.6%. The S&P 500 was down as much as 2.8%, but had pared losses to 1.5% in the afternoon.

Both the Nasdaq and the S&P 500 have fallen more than 10% off their highs, which is how Wall Street typically defines a correction. IBD changed its market outlook to correction on Oct. 10, before either index fell that much.

The Dow Jones industrial average was down 0.8%, which seems like a pinprick in the context of the week’s hemorrhage.

Intel Leads Dow; Bear Market Hugs Leaders

On the Dow, Intel (INTC) shined with a 4.5% rally after the chipmaker beat third-quarter earnings estimates. But Intel shares remain below a down-sloping 50-day moving average and deep in a price correction.

Market volume was tracking higher compared with the same time on Thursday. Declining stocks led advancers by 11-5 on the NYSE and by 9-5 on the Nasdaq.

Leading stocks are in a bear market already, at least by one measure. The Innovator IBD 50 ETF (FFTY) fell more than 20% from its prior high, a decline that is normally accepted as the definition of a bear market. The IBD 50 index itself also hit a 20% loss today.

In the IBD 50, the average stock is 14% below its prior high. NetApp (NTAP), Allison Transmission (ALSN), PGT Innovations (PGTI) and Brooks Automation (BRKS) sank below their 200-day moving averages. Vici Properties (VICI), a REIT that broke out Thursday, fell back below the 21.91 buy point Friday.

To be sure, many other growth stocks have crumbled even more, but they’ve lost their place in the IBD 50. For example, Grubhub (GRUB) and Advanced Micro Devices (AMD) were in last weekend’s list, but are now gone. Both accelerated their sell-offs after earnings reports.

Chipmakers, materials, mining and banks are in bear markets of their own. The Philadelphia Semiconductor Index and the SPDR S&P Bank ETF (KBE) are more than 20% off highs. So are Materials Select Sector SPDR (XLB) and SPDR S&P Metals & Mining (XME).

Amazon.com (AMZN) and Alphabet (GOOGL) did the most damage on the Nasdaq. Both companies missed revenue expectations late Thursday and sold off Friday.

Amazon fell below its 200-day moving average but pared its loss to 7.5%. Alphabet, the parent of Google, also trimmed losses and was down more than 2%.

The market shrugged off the third-quarter GDP report, which showed an increase of 3.5%. That’s slower than the increase of more than 4% in Q2 but still beat economists’ forecasts.

Consumer discretionary, consumer staples, software and utilities were the weakest sectors.

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