Markets Right Now: Dow sinks 800 as tech companies swoon

Mae Love
October 11, 2018

The Dow plunged almost 832 points on Wednesday, the third-worst point decline in history.

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. The index fell by more than 3%. As LPL Financials' Ryan Detrick notes, the S&P 500 just came off its least volatile third quarter since 1963, has been up for six consecutive months, and hasn't closed up or down more than 1% for more than three straight months, "one of the longest streaks ever". Technology companies were among the losers, with the Nasdaq Composite dropping more than 2% to 7,575.34.

USA stock indexes fell in early trading Wednesday as interest rates nudged higher yet.

Williamson said the month of October had traditionally been a tough time for investors, with major corrections in markets in the past during this month.

The Dow Jones Industrial Average fell as much as 519 points in afternoon trading Wednesday. The Dow's percentage decline doesn't crack the top percentage declines. The index didn't reach 700 again until 1987.

USA 10-year Treasuries, a closely-watched indicator of bond yields, hit a seven year high of 3.26pc on Wednesday.

Although that's largely because the U.S. economy is so strong, the spike in rates for the benchmark United States 10-Year Treasury has investors wondering if the near-decade-old bull market may finally be ending. Higher rates can also slow economic growth, making it more expensive for businesses to borrow and for consumers to spend.

Continued worries about a slowdown in China's economy - especially as trade tension with the United States has escalated - were also dragging down the broader market.

THE Australian share market has plunged at the open, with every sector deep in the red following Wall Street's overnight tumble.

But there were few places to hide Wednesday. "Semiconductors have the most exposure to China out of segments in the S&P 500". The stock fell 16.8 percent to 49 cents.

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Is the dip hitting other markets?

Some experts said this isn't a time to panic.

"The selloff is healthy", Heider said.

Mona Mahajan, U.S. investment strategist at Allianz Global Investors in NY, said the market could potentially sell off as much as 10 percent from its records before advancing again.

"Fear is rising", says chief investment officer at Cumberland Advisors David Kotok. That's good news for markets: If inflation were to spike, it would push the Federal Reserve to get more aggressive in raising interest rates.

The increase in yields from these bonds - which are parcels of United States government debt - can hurt stocks since they will provide competition for investors' cash.

And Geoff Alexander, the president of R. M. Davis, a wealth management firm, said he wasn't getting too nervous about Wednesday's market madness either.

A bear market by many definitions requires a drop of at least 20% in the S&P 500 from a bull-market peak; likewise, a bear market starts counting at a 20% rise out of a deep trough. The relative lack of volatility was a bit troubling.

USA stocks have plunged to their worst loss in eight months. "But this nothing to be overly concerned about", Alexander said.

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