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

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Politics: Senate Democrats block vote on McConnell's targeted COVID relief bill McConnell urges White House not to strike stimulus deal before election.
  2. Economy: Why the stimulus delay isn't a crisis (yet).
  3. Health: Studies show drop in COVID death rate — The next wave is gaining steam — The overwhelming aftershocks of the pandemic.
  4. Education: Schools haven't become hotspots — San Francisco public schools likely won't reopen before the end of the year.

Senate Democrats block vote on McConnell's targeted COVID relief bill

Photo: Stefani Reynolds/Getty Images

Senate Democrats on Wednesday blocked a vote on Republicans' $500 billion targeted COVID-19 relief bill, a far less comprehensive package than the $1.8 trillion+ deal currently being negotiated between the Trump administration and House Democrats.

Why it matters: There's little appetite in the Senate for a stimulus bill with a price tag as large as what President Trump and House Speaker Nancy Pelosi have been calling for. Senate Majority Leader Mitch McConnell's (R-Ky.) "skinny" proposal was mostly seen as a political maneuver, as it had little chance of making it out of the Senate.

The hazy line between politics and influence campaigns

Illustration: Aïda Amer/Axios

The recent firestorm over the New York Post’s publication of stories relying on data from a hard drive allegedly belonging to Hunter Biden shows the increasingly hazy line between domestic political “dirty tricks” and a foreign-sponsored disinformation operation.

Why it matters: This haziness could give determined actors cover to conduct influence operations aimed at undermining U.S. democracy through channels that just look like old-fashioned hard-nosed politics.