Published: Thu, October 11, 2018
Business | By Eloise Houston

Stocks have their worst day in months; Dow drops 800-plus points

Stocks have their worst day in months; Dow drops 800-plus points

That's helped make technology stocks more volatile in the last few months. Every one of the 11 S&P 500 sectors finished down for the day. The Nasdaq composite, which has a high concentration of technology stocks, tumbled 316 points, or 4.1 percent, to 7,422.

But there were few places to hide Wednesday. Since early 2009, the S&P 500 has quadrupled, driven higher by the US economic expansion, hefty profits for corporations and historically low interest rates, all of which makes stocks an attractive investment.

Big moves in interest rates tend to unsettle investors, and they can also push them to sell stocks and buy bonds instead. The U.S. central bank hiked its rate last week, and Canada is expected to follow suit at the end of the month. Higher rates increase borrowing costs, pinching corporate profits.

The markets have been on a historic climb - with the Dow and S&P each notching dozens of new highs since 2016 - buoyed by a strong US economy and solid corporate earnings.

Major economic reports have pointed to unemployment at a 50-year low and tax cuts beginning to take effect.

"Two weeks ago this kind of news would not have affected the market", he said.

And Geoff Alexander, the president of R. M. Davis, a wealth management firm, said he wasn't getting too nervous about Wednesday's market madness either. Trump told reporters after landing in Erie, Pennsylvania, for a campaign rally that he believes the Fed "is making a mistake" with its campaign of rate increases. The S&P 500 Industrials index has slumped 2.4%, implying that investors are concerned about growth, while the S&P 500 Financials index, off 0.8%, is outperforming, a sign that rising rates are probably still at the top of the market's mind. Eastern time. It's on track for its fifth straight drop, which hasn't happened since right before the 2016 presidential election. The stock fell 34 percent to 38 cents in morning trading.

USA crude settled down $1.79 at $73.17 per barrel and Brent fell $1.91 to settle at $83.09.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged.

Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on Wednesday. Boeing lost 4.7 percent to $367.57 and Alphabet, Google's parent company, gave up 4.6 percent to $1,092.16.

The two-year yield soared to its highest mark since 2008.

Benchmark U.S. 10-year Treasury notes rose late in the day, pushing yields down to 3.1931 percent. It was at just 3.05 per cent early last week.

He notes that while the USA stock market has managed to post gains virtually uninterrupted, that's not the case in most other parts of the world, so that trend may be finally catching up in North America.

USA stocks notched solid gains in the third quarter as investors brushed aside worries about trade wars and focused on strong corporate earnings and solid United States economic data. It's not just tech though, as all the FAANGs get walloped despite being in three different sectors now.

Wall Street stocks plunged Wednesday, with major indices losing more than three percent in a selloff prompted by the sudden jump in U.S. interest rates.

"As stocks go up, tech goes up more than the stock market", said Gina Martin Adams, chief equity strategist for Bloomberg Intelligence.

"Amazon recently announced they were increasing wages, Facebook is spending a ton on security", she said. Only 17 stocks in the S&P 500 wound up with a gain.

Elsewhere, insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles an hour. Berkshire Hathaway dipped 4.1 per cent to $214.64 and reinsurer Everest Re slid 4.6 per cent to $218.97.

Sears Holdings plunged 32 percent after the Wall Street Journal said the debt-laden retailer was preparing for a possible bankruptcy. The stock fell 16.8 per cent to 49 cents.

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