Wall Street plunges as investors seek safety

11 October, 2018, 14:40 | Author: Brooke Harris
  • Markets Right Now: Stocks fall sharply as bond yields rise - 570 NEWS

Stocks are falling sharply on Wall Street as bond yields continue to rise, putting the S&P 500 index on track for its fifth drop in a row.

Technology giants have suffered an investor rout that sent USA stock markets falling heavily on Wednesday. Microsoft gave up 3.3 percent.

The advance of US Treasury yields to more than seven-year highs, as well as escalating fears over US-China trade relations, has hurt equity investor confidence, with the major US indexes losing more than two per cent overnight.

Elsewhere, shares of Sears plummeted more than 37% after reports the cash-strapped retailer could file for bankruptcy protection as soon as this week.

UK: Britain's blue-chip FTSE 100, for example, has lost 1.22% to trade at 7,058 points, while Italy's FTSE MIB index is now just a whisker away from entering a bear market, down 1.16% at 19,489.

The Dow ended down 831 points, or 3.1%, at 25,598.

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 USA interest rates and increasing trade worries.

Tech leaders Amazon (AMZN), Facebook (FB) and Netflix (NFLX) all helped lead the market lower Wednesday while stodgier companies like food companies Smucker (SJM) and General Mills (GIS), gold miner Newmont (NEM) and bargain retailers Dollar General (DG) and Dollar Tree (DLTR) finished the day higher.

The rates rose Wednesday after the government released data showing the producer price index rose 0.2 percent in September and is up 2.8 percent on a year-over-year basis.

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The Dow Jones Industrial Average gave up 738 points, or 2.8 percent, to 25,686. That decline came after the Dow's largest single-day drop in history, when it fell 1,175 points earlier that month.

This time around, strong economic data anxious bond investors, who sent the benchmark yield on Tuesday to 3.261 percent, the highest since early May 2011.

Stocks from emerging markets were also hard hit. Brent crude, the global standard, lost 2.2 per cent to $83.09 a barrel in London.

The Nasdaq composite, which has a high concentration of technology companies, suffered its biggest loss in more than two years and has dropped nearly 8 percent since the start of October.

Tom Cahill of Ventura Wealth Management said investors were also unnerved by remarks from luxury company LVMH of a crackdown on some goods in China amid the country's bitter dispute with the United States. Natural gas rose 0.6 percent to $3.28 per 1,000 cubic feet. Heating oil fell 1.2 per cent to $2.39 a gallon.

Since Sept 10, the yield on the 10-year U.S. Treasury note is up about 28 basis points, including a big spike last week.

US gold futures settled up $1.9, or 0.16 percent, at $1,193.4.

The S&P 500 fell 39 points, or 1.4 percent, to 2,840. Copper fell 0.9 percent to $2.78 a pound. Investors see many of these countries as being vulnerable to higher USA interest rates, which can pull away investment dollars.

The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday. Brazil's Bovespa lost 2.5 per cent and the Merval in Argentina sank 2.2 per cent. The euro rose to $1.1525 from $1.1496.

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