Dow Jones drops 832 points in third worst drop in history

Mae Love
October 11, 2018

Gold rose as sliding global stock markets prompted risk-wary investors to seek the metal, and a drop in U.S. Treasury bond yields helped push the dollar lower.

Wall Street has suffered heavy falls on Wednesday. Shares of Facebook, Amazon, Apple and Netflix and Google, the so-called FAANG stocks, were among the hardest hit, shedding billions in market capitalization.

At 11:22 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index was down 123.08 points, or 0.79 per cent, at 15,392.22.

"Clearly stocks are spooked by higher rates and maybe some inflation that seems to be creeping in", said Michael Farr, CEO of Farr, Miller & Washington.

It will take more than a daily stock market correction to stop the Fed from hiking, said George Goncalves, managing director and head of fixed income strategy at Nomura in NY.

The Dow ended down 831 points, or 3.1%, at 25,598.

The Nasdaq composite, which has a high concentration of technology companies, had its biggest loss in more than two years. In 1987, stocks dropped more than 20 percent on a single day-Black Monday, Oct. 19-after a strong rally crashed into the Persian Gulf turmoil and trade deficits.

Oil prices fell more than 2 percent as U.S. stocks plunged, even though energy traders anxious about shrinking supply from Iran due to U.S. sanctions and kept an eye on Hurricane Michael, which closed almost 40 percent of U.S. Gulf of Mexico output.

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Shares in upscale jewellery retailer Tiffany & Co and perfume maker Estee Lauder both fell 7 percent after a warning from French luxury goods firm LVMH about softening demand in China.

Other analysts said they had expected the pullback because the soaring market was due for a correction.

It followed a bleak session in Europe, where Germany's Dax and France's Cac 40 had each ended the day more than 2% lower.

Benchmark U.S. crude oil fell 2.4 per cent to $73.17 a barrel in NY. Brent crude, the global standard, lost 2.2 per cent to $83.09 a barrel in London.

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 0.53 percent versus the greenback at 112.36.

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

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.

In London, the FTSE 100 was down by 1% as hopes of a Brexit deal lifted the pound - weakening the sterling value of earnings for numerous global index's multinational constituents. Before that, Bitcoin was showing stability in value as per the general crypto volatility standards around the same time stock market indexes were trending sideways. Investors see many of these countries as being vulnerable to higher US interest rates, which can pull away investment dollars. Brazil's Bovespa lost 2.5 percent and the Merval in Argentina sank 2.2 percent. The British pound rose to $1.3197 from $1.3146.

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