Dow plunges more than 800 points as tech stocks take beating

11 October, 2018, 05:29 | Author: Brooke Harris
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It came after Wall Street stocks plunged Wednesday, with major indices losing more than three per cent in a sell-off prompted by the sudden jump in U.S. interest rates and increasing trade worries.

The rise in rates is weighing particularly heavily on areas of the market that had earlier been the biggest winners, and technology stocks had some of the morning's steepest losses. Apple and Amazon both had their worst day in two and a half years. The S&P 500 dropped 0.6%, and the technology-heavy Nasdaq Composite declined 1%.

Earnings season should improve investors' moods through the end of the year, he writes, with a cycle peak in 2020 and the next major low not due until 2020.

The benchmark S&P/ASX200 index was down 119.1 points, or 1.97 per cent, at 5,930.7 points at 1030 AEDT on Thursday, slipping below the 6,000-point mark for the first time since early June. That hasn't happened since right before the 2016 presidential election.

The S&P/NZX50 was down 2.3 per cent today falling 204 points to 8845.

The 800-point drop of the Dow Jones Industrial Average on October 10 may be a blip, and so could the almost 5% decline over five days in the S&P 500.

"The stock market in the USA has started to take notice, and will continue to, particularly if the speed at which rates rise becomes alarming", Jeffrey Gundlach, chief executive of Doubleline Capital, told Reuters last week. The stock fell 16.8 percent to 49 cents. The Dow Jones Industrial Average fell 831 points, its worst loss in eight months.

In technology, Microsoft dropped 3.1 per cent to US$108.76 Wednesday and Nvidia lost 4.7 per cent to US$253.13.

The CAC 40 in France dropped 2.1 percent, Germany's DAX lost 2.2 percent and the FTSE 100 in London fell 1.3 percent.

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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 fell 3.8 per cent to US$215.20.

Luxury retailers tumbled after LVMH, the parent of Louis Vuitton, said its sales growth in China slowed.

U.S. Treasury yields held near multi-year highs after producer prices climbed 0.2 percent in September, feeding into the pressure on the Federal Reserve to continue to raise interest rates even as the global economy struggles with headwinds from President Trump's trade war with China.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy.

"If investors are going to take profits then it will be from some of the bigger, high-growth names", Nauman said. On Wednesday, the 10-year yield once again touched its highest level in seven years.

Bond prices fell. The yield on the 10-year Treasury rose to 3.23 percent.

Grant Williamson, a client adviser at broker Hamilton Hindin Greene, said another turbulent day on Wall St was always likely to have an impact on the local market.

Gina Martin Adams, the chief equity strategist for Bloomberg Intelligence, said investors were concerned about the big increase in yields, which makes it more expensive to borrow money.

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