Economy

United States stocks tumble as Dow sheds another 1000 points

United States stocks tumble as Dow sheds another 1000 points

Either way, with both the Dow Jones industrial average and the more-important Standard & Poor's 500 index plunging off their historic highs, we now find ourselves in correction territory, destined to wait things out and see if stocks fall further still or get "corrected" and lift us back toward the irrational exuberance we were all approaching just two weeks ago. Apple's guidance, for one, left a lot to be desired, while Alphabet's quarterly profit missed Wall Street's consensus.

United States stocks plummeted almost 4% on Thursday in another dramatic session as investors continued to fret about the possibility of rising inflation and higher interest rates. Bears, including short sellers that bet on the market decline, say that the market is over-stretched in the context of rising bond yields as central banks withdraw their easy money policies of recent years.

The losses were broad, with technology stocks as well as restaurant chains, cruise lines, department stores and other consumer-focused companies accounting for much of the market's decline.

The Bank left interest rates at 0.5% at its meeting, but said a strengthening economy meant interest rates were likely to rise sooner than the markets were expecting. The tumult started last Friday as investors anxious about signs of rising inflation. It could prompt the Federal Reserve to raise interest rates at a faster pace, which would act as a brake on the economy. "Access to credit is going to be zero this year".

The S&P 500 and the Nasdaq composite followed the Dow as it fell - dropping 0.3 percent and 0.4 percent respectively. Boeing and Caterpillar took some of the worst losses.

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To put the day's move in a broader context, the point drop in the Dow (which is a basket of 30 large USA company stocks versus the 500 or so stocks in the S&P) was just 2.1%. It hasn't been that low since mid-November.

The benchmark FTSE 100 share index fell 35.51 points, or 0.5%, to 7,135.18.

Investors are still weighing whether the sharp swings this week are the start of a deeper correction or just a temporary bump in the nine-year bull market, spurred by concerns over rising interest rates and bond yields.

That added to expectations that the world's major central banks are now firmly on course to wind down the emergency stimulus they have pumped through the financial system since 2009, driving an nearly decade-long stock market rally. "In January we talked about fear of missing out".

In stocks, Viacom Inc (NYSE:VIAB) was a notable gainer, up 7.93% to US$32.94, despite its fourth quarter revenues falling as it was hit by heavy declines in film and theatre income. U.S. West Texas Intermediate (WTI) crude settled at $59.20, down 3.2 percent. The company also issued a disappointing forecast. The Dow is on track for its worst weekly percentage drop since the crisis. The measure dropped to 16.4 as of Thursday, meaning stocks were less expensive but still not cheap.