USA stocks plunge toward their worst loss in six months

12 October, 2018, 01:26 | Author: Brooke Harris
  • AP  File		The interior of the New York Stock Exchange

The Dow Jones industrials fell 545 points, or 2.1 percent, to 25,052.83 and the benchmark S&P 500 dropped 57 points, or 2.1 percent, to 2,728.37.

The yield on the 10-year Treasury note fell to 3.15 percent from 3.22 percent late Wednesday. Technology companies and retailers, including longtime market favorites Apple, Alphabet and Amazon, extended their recent slide.

The Nasdaq composite index was off 43 points beflore climbing the same amount and the S&P 500 was down 15 before edging into positive territory.

That all played into a market that is increasingly anxious about global growth after warnings from the International Monetary Fund this week and a rise in Treasury yields to a more than 7-year high above 3 percent that signals a tightening of available capital globally. The S&P 500 closed at 2,728.38, down 2 percent.

The Dow Jones Industrial Average fell 545 points after dropping 831 points Wednesday. That decline came after the Dow's largest single-day drop in history, when it fell 1,175 points earlier that month. The VIX Volatility Index was higher at 22.27 for a gain of 6.32 points or 39.62%.

USA consumer prices rose less than analysts had forecast in September, reducing expectations the pace of inflation is accelerating despite a tightening labor market. Jitters about those companies have led to this short-term fall, too, while drops were felt throughout the market.

"Equity investors are surprised by the pace at which rates have risen", Marcella Chow, global market strategist at J.P. Morgan Asset Management, said in a report.

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Shares in upscale jewellery retailer Tiffany & Co and perfume maker Estee Lauder both fell 7 percent after a warning from French luxury goods firm LVMH about softening demand in China.

The increase in yields from these bonds - which are parcels of United States government debt - can hurt stocks since they will provide competition for investors' cash. Higher rates can also slow economic growth, making it more expensive for businesses to borrow and for consumers to spend.

"The market is not necessarily going to take out much from the yield path", Goncalves said.

Gold rose 0.2 per cent to $1,193.40 an ounce.

Technology giants have suffered an investor rout that sent USA stock markets falling heavily on Wednesday. Stocks continue to retreat on Wednesday, with 10 of the 11 sectors in the red and bond yields continuing to march higher.

The dollar fell to 111.94 yen from 112.59 yen, and the euro rose to $1.1594 from $1.1525.

Losses were fairly broad-based, with tech companies Amazon and Microsoft plummeting more than three percent, along with Boeing, Nike and Caterpillar.

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