Published: Fri, October 12, 2018
Money | By Ethel Goodwin

Wall Street plunges as investors seek safety

Wall Street plunges as investors seek safety

The broad-based S&P 500 also dropped 2.1 per cent to 2,728.26, while the tech-rich Nasdaq Composite Index fell 1.3 per cent to 7,329.06. Amazon skidded 6.2 percent to $1,755.25. The pan-European FTSEurofirst 300 index of leading regional shares closed down 1.57 percent.

At the closing bell in the New York Stock Exchange on Wednesday, the Dow Jones Industrial Average had lost 3.1 percent or 830 points to finish at 25,613.35, in the biggest fall in eight months.

USA stocks experienced their worst two-day stretch in years this week, with the Dow dropping 1,200 points on Wednesday and Thursday. Technology stocks fell especially sharply.

Bond yields and therefore interest rates have been rising for more than two years as the US economy grew strong.

Wall Street indexes continued their slide in Thursday's volatile session as investors anxious about rising interest rates and braced for a trade war hit to corporate earnings a day ahead of the quarterly reporting season kickoff. "I don't think so", he said.

On Thursday, President Trump renewed his criticism of the Federal Reserve, blaming the recent downturn in the stock market on the Fed's rate policy. "You're going to see a lot of volatility in the next week or so". "I think the Fed has gone insane", he charged.

Trump said he had no intention of firing Jerome Powell, who he appointed as Fed chairman in February.

In only seven trading sessions this month, yields on 10-year U.S. Treasuries US10YT=RR have climbed about 18 basis points and crested over 3.20 percent, hitting their highest levels in more than seven years.

The Nasdaq composite, which has a high concentration of technology companies, suffered its biggest loss in more than two years and has dropped nearly 8 percent since the start of October. Apple shares fell 1.2 percent. JPMorgan Chase and several other banks will report their third-quarter results Friday morning.

Technology and retail companies continued to stumble. A move of more than two deviations, or 40 basis points now, leads to negative S&P 500 returns, Goldman says. Microsoft and Alphabet, Google's parent company, held up better than the rest of the market. Those stocks have made huge gains for years, but they're now out of favor.

"As uncertainty continues to prevail in financial markets across the world, many investors are staying on the sidelines until more clarity emerges in U.S. Treasury and Chinese markets", said Yasuo Sakuma, chief investment officer at Libra Investments, according to Reuters.

The Nasdaq composite has fallen 9.7 percent since it set a record high in late August.

"People fear building prices into the system, both from China trade problems, other tariffs the US has put into place, wage pressure, and today there is a little bit of concern about what the Hurricane in Florida could do to energy prices". Heating oil shed 2.6 percent to $2.33 a gallon.

Like this: