US markets plunge; interest rate hike fears weigh in
- Author: Arturo Norris Feb 09, 2018,
Feb 09, 2018, 17:52
Thursday's decline followed the largest drop in the Dow's history on Monday when it fell 1,175 points or 4.6 percent.
Major indexes in Asia and Europe took steep losses and US markets started sharply lower, only to repeatedly change direction.
Higher interest rates push up borrowing costs for companies and individuals, which can hurt corporate profits and curb economic activity.
Despite the big swings, Tuesday's trading looked similar to the patterns that have shaped the market for the previous year: investors bought retailers like Amazon and Home Depot and technology and industrial companies and banks, which do better when economic growth is strong. "There would be no need to panic when we start to see swings in the market like we have been", said Corpina. The information fanned fears that inflation would soon tick upward, leading regulators to raise interest rates.
The index closed up more than 560 points after it was down 500 points following the 9:30 a.m. opening bell, marking a 10% slide since it reached a record high on January 26. The Nasdaq composite fell 1.7 percent.
"A big down day like Monday doesn't just go away". "It can take two to three weeks to work through the system". "In January we talked about fear of missing out".
The losses were broad. Even after this week's losses, the S&P 500 index is up 12.5 percent over the past year. After falling as low as 9 in 2017, it rose as high as 36 on Thursday.
On Wednesday, the US Senate had reached a two-year bipartisan budget deal worth around $300 billion in an attempt to end the kind of squabbling over fiscal issues that has plagued Washington for years. The company also issued a disappointing forecast. The stock dropped $2.39, or 10.9 percent, to $19.57.
Asian shares have opened lower and are tracking the overnight plunge on Wall Street. The stock dropped $28.24 to $59.80.
Today, the Dow dipped below 24,000 for the first time since November.
USA crude oil fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in NY. Brent crude, which is used to price worldwide oils, shed 73 cents to $66.89 per barrel. "That certainly adds some increased volatility for market participants". That also sent the pound higher.
The Cboe Volatility Index, known as the VIX, fell 2.3 points to 27.73, but that was still more than twice levels generally seen in the past few months. The selling then moved to Europe, where Britain's FTSE (-2%), Germany's DAX (-2.44%), and France's CAC (-2.57%) are all under pressure.
Analysts cited higher Treasury bond yields as the catalyst for the drop, coupled with the view that the market surged to unsustainably high levels in December and January in the euphoria over United States tax reform.
But investors say they had been bracing for corrections of up to 10% after a bullish couple of years. Heating oil lost 1 cent to $1.92 a gallon. The March copper contract was down one cent to US$3.08 a pound.
Among the biggest losers Tuesday was Tokyo's Nikkei 225 stock average, which ended 4.7 percent lower. South Korea's Kospi gained 0.5 percent and the Hang Seng of Hong Kong rose 0.4 percent.