Dow Jones Industrials Sink 800-plus Points

Devin Lawrence
October 12, 2018

The Dow Jones Industrial Average experienced the third worst point decline in its history Wednesday, falling more than 800 points. Kinahan said investors don't know what to do because stock prices are skidding, but bond prices have also dropped sharply, which limits the appeal of bonds as an investment.

Fears over the worldwide trade war, rising rate hikes, the impact of Hurricane Michael, the upcoming USA midterm elections and a potentially disappointing Q3 earnings season likely all played a role in the weak market. The tech-heavy Nasdaq notched its second day of trouble with a 1.3 percent loss, landing at 7,329.

The S&P 500 has fallen more than two percent and the Nasdaq 100 Index's losses are approaching 10 percent on Thursday. Should the S&P close lower today, it will be the sixth consecutive time, something that hasn't happened since before Donald Trump's election.

All 11 sectors in the S&P 500 are lower, with banks and energy stocks the hardest hit.

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

The technology sector, the biggest loser in Wednesday's sell-off, closed down 1.3 percent on Thursday.

Stocks fell Wednesday as Wall Street sweats over global growth prospects and a bond selloff.

The tech sector was hit hardest, with Netflix down almost 7 per cent, Amazon down 5 per cent and Apple, Google and Facebook all down more than 3 per cent.

Treasury yields retreated from multi-year highs following the inflation data and as investors flocked to the relative safety of United States government bonds.

A surge in bond yields came to an end as investors who sought safety bought government bonds.

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 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

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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 10-year Treasury note yield traded around 3.23 percent, while the two-year yield reached its highest mark since 2008.

The 2-year yield hit its highest level since 2008.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices. Adams, of Bloomberg Intelligence, said investors have concerns about their future profitability, too.

Stocks are opening modestly lower on Wall Street following volatile trading in Asia and Europe.

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The rise in U.S. Treasury yields has been bolstered by good U.S. economic data that has reinforced expectations of multiple rate hikes over the next 12 months by the Federal Reserve.

West Texas Intermediate has shed almost $4 a barrel since Tuesday, marking its steepest two-day decline in more than three years.

"When we have a recalibration in values, it's not surprising that it takes more than one day", said Art Hogan, chief market strategist at B. Riley FBR.

Gold rose 0.2 per cent to $1,193.40 an ounce. Investors see many of these countries as being vulnerable to higher USA interest rates, which can pull away investment dollars.

Intel fell 2.6 percent and Nvidia 4.4 percent. Amazon, Apple, Alphabet and Facebook all fell by between 2.3pc and 3.9pc.

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