Dow sinks over 800 points, biggest drop in 8 months

11 Octubre, 2018, 14:43 | Author: Arnold Perez
  • Markets Right Now: Stocks fall sharply as bond yields rise - 570 NEWS

The Toronto Stock Exchange closed down 336 points, or more than two per cent, on Wednesday, the fourth day in a row that the benchmark Canadian stock index was lower. That's helped make technology stocks more volatile in the last few months.

Technology stocks, the biggest winners in the market over the past year, took some of the worst losses.

Alec Young, managing director of global markets research at FTSE Russell, said investors fear that rising interest rates and growing expenses are going to erode company profits next year.

The weakness in tech was led by semiconductor names after Swiss vacuum valve maker VAT Group said demand from chip equipment makers was softening.

"We've scratched our heads about the rise in stocks for the past 18 months".

The broadbased S&P 500 slumped 3.3 per cent to end at 2,785.68, while the tech-rich Nasdaq Composite Index plummeted 4.1 per cent to finish the session at 7,422.05. Eastern time. It's on track for its fifth straight drop, which hasn't happened since right before the 2016 presidential election. The Nasdaq composite dropped 173, or 2.2 percent, to 7,565. It's fallen 6.3 per cent over the last five days.

The Dow Jones Industrial Average lost 342 points, or 1.3 per cent, to 26,090.

USA government bonds resumed a selloff after rising to multi-year highs last week, with the 2-year yield rising to 2.906%, its highest level since June 2008.

The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday.

The Dow Jones Industrial Average experienced the third worst point decline in its history Wednesday, falling more than 800 points.

Apple gave up 4.6 per cent to US$216.36 and Microsoft dropped 5.4 per cent to US$106.16.

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Stocks from emerging markets were also hard hit.

Shares in Facebook, Amazon, Apple, Netflix and Google's parent company Alphabet - the so-called "FAANG" stocks that have driven USA markets to all-time highs recently - all fell in NY trading. Chipmaker Nvidia dropped 5 percent.

The Australian dollar was buying 70.65 U.S. cents shortly after 10:00am (AEDT).

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

Higher bond rates can weigh on stocks as they provide more competition for yield-hungry investors. The energy sector was close behind with a 2.9 percent loss, as oil extraction in the Gulf of Mexico shutting down due to the hurricane.

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

"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.

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 percent to 49 cents.

Oil prices fell more than 2 percent as U.S. stocks plunged, even though energy traders anxious about shrinking supply from Iran due to U.S. sanctions and kept an eye on Hurricane Michael, which closed almost 40 percent of U.S. Gulf of Mexico output. West Texas Intermediate crude oil, a USA benchmark, fell 2.1 per cent to US$73.36 a barrel - and the discounted price of Western Canadian Select oil widened to US$47 a barrel.

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