USA stocks plunge toward their worst loss in six months

Irving Hamilton
October 11, 2018

Here are five things to watch ahead of Thursday's US open.

Although the losses were widespread, stocks that have been the biggest winners on the market, including technology companies and retailers, suffered steep declines.

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.

What will fall hardest?

Stocks have slumped over the last week as a combination of strong economic data and positive commentary from Federal Reserve leaders sent bond yields rocketing higher as investors bet that interest rates will keep rising.

The Dow Jones Industrial Average fell 198.28 points, or 0.77 per cent, to 25,400.46.

USA stocks dropped on Thursday, extending a sell-off from a day earlier, after the major indexes broke though some key technical levels as risk-appetite showed no signs of picking up.

The spread of red ink overseas, though, suggested more turbulence ahead for Wall Street, where a growing list of concerns is sowing unrest for a market that has been on a historic run on the back of strong earnings.

The S&P 500 also fell 3.3 percent, marking its fifth straight decline, and the Nasdaq declined more than 4 percent, its worst percentage decline since June 2016. "That potentially gets us to rally", Abbasi said.

United States 10-year Treasuries, a closely-watched indicator of bond yields, hit a seven year high of 3.26pc on Wednesday. Jeweler Tiffany, handbag makers Michael Kors and Tapestry tumbled between 4.9 and 7.2 percent. In the previous session, the stock jumped 15 per cent on a Globe and Mail report that Altria Group was in talks for acquiring a stake.

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Gold rose 0.2 per cent to $1,193.40 an ounce.

MSCI's gauge of stocks across the globe fell percent, its biggest single-day fall since February.

For stock investors, the recent spike in bond yields may be prompting some uncomfortable deja vu.

"That suggests the Fed will keep raising rates, and that's taking the wind out of the stocks that have done the most, particularly in the tech sector".

Japan's Nikkei 225 added 0.2 per cent, South Korea's Kospi dropped 1.1 per cent and the Hang Seng in Hong Kong gained 0.1 per cent.

"It's a risk-off environment as investors are focusing on spiking yields and taking profits off the table as they are concerned about whether the bull market is actually coming to an end", said Ryan Nauman, market strategist at Informa Financial Intelligence in Zephyr Cove, Nevada.

The drop led a wider drop in U.S. markets.

In small-caps, the Russell 2000 closed at 1,575.91 for a loss of -45.95 points or -2.83%.

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

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.

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