Economy

Dow Jones slumps in worst day for USA markets in eight months

Dow Jones slumps in worst day for USA markets in eight months

At the closing bell, the Dow Jones Industrial Average had lost 3.1 percent or 830 points to finish at 25,613.35, in the biggest fall since February.

The losses were widespread as bond yields remained high after steep increases last week.

The S&P 500 lost 94 points, or 3.3 per cent, to 2,785. Chip gear producers Applied Materials, Teradyne and ASML Holdings fell between 3.5 percent and 4.6 percent. The benchmark index fell for the fifth straight day, which hadn't happened since just before the 2016 presidential election. Every one of the 11 S&P 500 sectors finished down for the day.

Alibaba dropped 4.1 percent after Morgan Stanley and Raymond James cut their near-term profit estimates on the Chinese e-commerce company, citing a softer economic environment in China.

Asian markets were broadly lower on Thursday after Wall Street slumped on a heavy selling of technology and internet stocks.

Shares in Facebook, Amazon, Apple, Netflix and Google's parent company Alphabet - the so-called "FAANG" stocks that have driven United States markets to all-time highs recently - all fell in NY trading.

Rising bond yields have been drawing investors out of the stock market, and the stocks that have performed best over the past year took some of the biggest losses Wednesday.

They also make bonds more attractive investments.

"Both companies highlighted rising costs, not only input costs but increasing operating expenses [and] marketing expenses", she said. The Russell 2000 index of smaller-company stocks shed 37 points, or 2.3 per cent, to 1,584. Jeweler Tiffany, handbag makers Michael Kors and Tapestry tumbled between 4.9 and 7.2 percent.

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The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy.

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

The Philadelphia Semiconductor index sank 2.64 percent, with Intel down 2.0 percent and Nvidia 4.7 percent.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices.

Gina Martin Adams, chief equity strategist for Bloomberg Intelligence, said the stocks have become more volatile in the last few months because investors have concerns about their future profitability.

"The stock market in the US has started to take notice, and will continue to, particularly if the speed at which rates rise becomes alarming", Jeffrey Gundlach, chief executive of Doubleline Capital, told Reuters last week.

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. Silver dipped 0.5 per cent to $14.33 an ounce.

Oil futures fell. USA crude gave up $1.27 to $71.90 a barrel.

The Australian dollar slipped against major currencies, down to 70.7 USA cents, 53.6 British pence, 61.4 Euro cents and 79.5 Japanese yen. The euro rose to $1.1525 from $1.1496.


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