Monday, 17 December, 2018

Dow Jones plunges 800 points as tech stocks tumble

BP_Donald I don't like Fed raising interest rates so quickly, says Trump
Priscilla Morrison | 11 October, 2018, 15:51

The president told reporters Wednesday that he believed the drop was a correction, and that the Federal Reserve Bank was to blame for raising interest rates.

"The Fed has gone insane", he told reporters on Wednesday as he arrived in Pennsylvania for a campaign rally. "They're so tight. I think the Fed has gone insane". A stock market correction is defined as a fall of at least 10 per cent from the high point of the last 52 weeks.

"I think the Fed is making a mistake".

The tech sector was hit hardest, with Amazon, Apple, Facebook and Netflix all in the red. The benchmark 10-year Treasury yield surged to a seven-year high on Tuesday and the 30-year bond yield jumped to its highest since 2014.

USA stocks took their worst loss in eight months Wednesday, with the Dow Jones Industrial Average sinking 831 points and the Nasdaq composite logging its biggest loss in more than two years.

US consumer price inflation is now above 2 percent annually and the unemployment rate is the lowest in about 40 years.

Investors are leaning into safer stocks with steady dividends - utilities and consumer staples - and pulling out of the higher-paying, higher-risk stocks as other guideposts of growth, like the communication sector, tumbled.

More news: Lancet report: Mental health disorders on the rise in India

She said in addition to rising interest rates, investors also fear that company profit margins will be squeezed by rising costs, including the price of oil.

The President said this week he prefers lower interest rates but added he would not speak directly to his Fed chairman appointee Jerome Powell, preferring instead to remain hands-off.

The benchmark Nikkei 225 dropped almost two percent at the open and extended losses to below the three-percent mark, as traders fretted about surging interest rates and an ongoing trade spat.

Currency investors took shelter in the safe-haven yen, resulting in steep losses for Japanese exporters, with electronics giant Sony down almost five percent as blue-chip firms flashed red across the trading board. The problem I have is with the Fed.

The FTSE 100 opened 1.5% lower - hovering just above the 7000 point level - following a 1.3% decline on Wednesday. The index fell by more than 3%. Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

President Donald Trump, who has claimed much of the credit for the strong economy, has criticized the Fed's pace of raising interest rates, saying going too fast could slow growth and job creation.

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