Dow Jones industrials sink 700 points as bond yields rise

12 October, 2018, 04:43 | Author: Sally Reid
  • Wall Street slumps as investors dump tech stocks

The Dow Jones Industrial Average closed at 25,598.74 on Wednesday with a loss of -831.83 points or -3.15%.

Trump on Wednesday strongly criticized the Fed for tightening rates, again signaling that he wanted interest rates to remain low.

All 30 Dow stocks were in the red, sending the index below 26,000 points for the first time in a month. Technology stocks fell especially sharply.

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. All this means that bonds, backed by the USA government, have become more attractive and thus many investors are turning to them as a risk-free investment.

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. "I think the Fed is out of control", the president said to reporters in the Oval Office. The Nasdaq dropped more than 4% in the worst percentage decline since June 2016. But eventually the high rates worry stock investors, as higher rates tend to increase borrowing costs and cut into profit margins.

The Dow Jones industrial average tumbled more than 400 points to just below 26,000 at lows. Tencent has retreated 43 percent from its high this year and fallen out of the top 10 global companies by market value.

The 10-year Treasury note yield traded around 3.23 percent a day after hitting its highest level since 2011. Amazon dropped another 2% to $1,719.36 and Apple fell 0.9% to $214.45. USA markets rebounded briefly after it was announced that President Trump would meet with Chinese leader Xi Jinping at next month's G-20 summit in Buenos Aires to discuss the intensifying trade conflict.

Technology and retail companies continued to stumble.

Mahrez miss leaves City, Liverpool and Chelsea all level at top
He noted that his England midfielder Jordan Henderson had barely two weeks' rest following the World Cup in Russian Federation . Guardiola acknowledged that his side had chosen to lower the tempo in the game to limit the potency of Liverpool's attack.

Augustine added that with earnings due out from big banks JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) on Friday morning, investors will look for new market sectors to take the lead from tech stocks. It pushed the two-day loss to almost 1,400 points.

Stocks are slumping for a second straight day as the market endures its most volatile stretch since February.

China was among the hardest hit overseas, with indexes in Shanghai and Hong Kong falling 5.2 and 3.5 percent, respectively.

The Nasdaq composite has fallen 9.6 percent since it set a record high in late August and the Russell 2000 has fallen 11 percent. Australia's S&P/ASX 200 slipped 2.4 percent to 5,906.00.

US gold futures settled up $1.9, or 0.16 percent, at $1,193.4.

"People fear building prices into the system, both from China trade problems, other tariffs the USA 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".

The Japanese yen strengthened 0.01 per cent versus the greenback at 112.29.

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