Saturday, 20 October, 2018

Stocks have their worst day in months; Dow drops 800-plus points

The Dow tumbles more than 400 points Dow Jones Industrials Sink 800-plus Points
Nellie Chapman | 11 October, 2018, 20:12

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

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 the boost company profits have gotten from the GOP tax overhaul.

"The tax cuts juiced earnings this year and that's not sustainable", he said.

"If the Feds are insane, this market reaction is bordering on insanity, as so many negative crosscurrents collide that is merely impossible to find a glint of optimism", he added.

U.S. stocks have plunged to their worst loss in eight months.

Tech stocks in the S&P 500 fell 2.7 percent Wednesday for the steepest loss among the 11 sectors that make up the index. Eastern time. It's on track for its fifth straight drop, which hasn't happened since right before the 2016 presidential election.

US crude fell 1.98 per cent to $71.72 per barrel and Brent was last at $81.30, down 2.15 per cent on the day.

All top ten cryptocurrencies and stocks from Dow Jones, S&P 500 and Nasdaq, are in the red on Thursday. The Dow Jones Small-Cap Growth TSM Index closed at 9,804.90 for a loss of -308.43 points or -3.05%. The Dow Jones fell by more than 500 points, a drop of nearly 2pc, while the wider S&P 500 index fell for a fifth day straight, its worst run in nearly two years.

Microsoft dropped 5.4 percent to $106.16. Amazon skidded 4.8 percent to $1,781.21.

Markets Insider
Markets Insider

The stock market as a whole, however, had solid reasons behind the fall: rising interest rates. Boeing lost 4 per cent to $370.04 and Alphabet, Google's parent company, gave up 3.2 per cent to $1,109.08.

Bear markets since 1975 have had far lower percentage drops at their bottom, even as markets have grown remarkably in inflation-adjusted dollars. Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

Luxury stocks were another casualty of worries of slowing China demand, sparked by LVMH's results.

USA stocks notched solid gains in the third quarter as investors brushed aside worries about trade wars and focused on strong corporate earnings and solid United States economic data.

In only seven trading sessions this month, yields on 10-year U.S. Treasuries have climbed about 18 basis points and crested over 3.20 percent, hitting their highest levels in more than seven years. It was at just 3.05 percent early last week.

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. Add Stock Market as an interest to stay up to date on the latest Stock Market news, video, and analysis from ABC News.

"Amazon recently announced they were increasing wages, Facebook is spending a ton on security", she said.

Meanwhile struggling retailer Sears was in focus as the Wall Street Journal reported that it was preparing to file for bankruptcy. The stock fell 16.8 percent to 49 cents.