Tuesday, 23 October, 2018

Tech, luxury goods lead Wall Street slide

Dow falls 500 points as rising Treasury yields drag down market The New York Stock Exchange
Priscilla Morrison | 11 October, 2018, 10:03

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 U.S. interest rates and increasing trade worries.

As long as earnings and the U.S. economy are continuing to grow, this market pullback will wind up being a healthy dip Alexander said. The CBOE Volatility Index, or VIX, a market barometer often dubbed Wall Street's fear gauge, surged more than 25%.

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

The broad-based S&P 500 slumped 3.3 percent to end at 2,786.46, while the tech-rich Nasdaq Composite Index plummeted 4.0 percent to finish the session at 7,427.74.

The S&P 500 index hasn't suffered a five-day losing streak since November 2016, just before the USA presidential election.

Meanwhile, the tech-heavy Nasdaq has lost 4.1 per cent to 7,422.

The S&P 500 fell 39 points, or 1.4 per cent, to 2,840. The Russell 2000 index of smaller-company stocks shed 37 points, or 2.3 per cent, to 1,584. The price of the bond with the lower interest rate, known as its coupon, will fall enough to raise the yield to mirror the higher rate. As LPL Financials' Ryan Detrick notes, the S&P 500 just came off its least volatile third quarter since 1963, has been up for six consecutive months, and hasn't closed up or down more than 1% for more than three straight months, "one of the longest streaks ever". That didn't happen Wednesday as stocks fell further late in the day.

Microsoft dropped 4 per cent to $107.82. Amazon skidded 6.2 per cent to US$1755.25. Industrial and internet companies also fell hard.

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.

More news: Trump calls stock sell-off 'a correction,' says Federal Reserve is 'crazy'

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 per cent to US$213.10 and reinsurer Everest Re slid 5.1 per cent to US$217.73.

The retreat from luxury stocks was due to slowing demand from China as its trade war with the United States continues and shows no signs of easing.

USA stock exchanges recorded biggest losses in 8 months as rising interest rates made investors flee risky stocks.

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 Dow fell 831 points, or 3.1 percent, to 25,598.

Wall Street stocks plunged Wednesday, with major indices losing more than three percent in a selloff prompted by the sudden jump in U.S. interest rates.

Rising costs, as inflation and borrowing rates pick up, could also be a worry for stock markets.

Gina Martin Adams, the chief equity strategist for Bloomberg Intelligence, said investors are concerned about the big increase in yields, which makes it more expensive to borrow money.

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