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After an epic 2017, the three major U.S. stock market indices are trending toward a negative year in 2018, with a return to volatility and puzzling sell-offs after strong — but not astronomical — earnings numbers in formerly stalwart U.S. stock sectors.

Expand chart
Data: Money.Net; Chart: Harry Stevens/Axios

Between the lines: Maybe the valuations were a little too hot, or investors were spoiled by double digit returns.

  • Perhaps it's people looking at the economy and forthcoming interest rate hikes and deciding to sell off now in case things turn south.
  • Or maybe it's the fear of second-order effects from a potential cold war with China.

The other side: “This sort of price action is extremely normal,” Peter Lazaroff of Plancorp told MarketWatch. “What was strange was the outsized returns investors have earned in recent years with effectively no volatility.”

Driving the news:

  • The FAANG stocks (Facebook, Amazon, Apple, Netflix and Google) have collectively lost $1 trillion in market value from their 52-week highs.
  • Four out of the 5 worst performing S&P 500 stocks today were retail companies (L Brands, Target, Ross Stores, and Kohl's), per FactSet.
  • In the last 3 months, the Volatility Index (VIX) — a fear indicator on Wall Street — has surged more than 50%, per FactSet. The gauge still remains low by historical standards, but it's producing big daily swings like the chart shown below.
Data: Factset; Chart: Lazaro Gamio/Axios

The bottom line: Enjoy the holidays and get some rest. December and 2019 could be a wild ride.

Go deeper

Updated 1 hour ago - Politics & Policy

In photos: The Biden and Harris inauguration

President Biden and first lady Jill Biden watch a fireworks show on the National Mall from the Truman Balcony at the White House on Wednesday night. Photo: Chip Somodevilla/Getty Images

President Biden signed his first executive orders into law from the Oval Office on Wednesday evening after walking in a brief inaugural parade to the White House with First Lady Jill Biden and members of their family. He was inaugurated with Vice President Kamala Harris at the U.S. Capitol on Wednesday morning.

Why it matters: Many of Biden's day one actions immediately reverse key Trump administration policies, including rejoining the Paris Agreement and the World Health Organization, launching a racial equity initiative and reversing the Muslim travel ban.

Republicans pledge to set aside differences and work with Biden

President Biden speaks to Sen. Mitch McConnell after being sworn in at the West Front of the U.S. Capitol on Wednesday. Photo: Erin Schaff-Pool/Getty Images

Several Republicans praised President Biden's calls for unity during his inaugural address on Wednesday and pledged to work together for the benefit of the American people.

Why it matters: The Democrats only have a slim majority in the Senate and Biden will likely need to work with the GOP to pass his legislative agenda.

The Biden protection plan

Joe Biden announces his first run for the presidency in June 1987. Photo: Howard L. Sachs/CNP/Getty Images

The Joe Biden who became the 46th president on Wednesday isn't the same blabbermouth who failed in 1988 and 2008.

Why it matters: Biden now heeds guidance about staying on task with speeches and no longer worries a gaffe or two will cost him an election. His staff also limits the places where he speaks freely and off the cuff. This Biden protective bubble will only tighten in the months ahead, aides tell Axios.