USA stocks plunge further, Dow drops 830 points

11 October, 2018, 14:44 | Author: Eric Barnett
  • The Dow tumbles more than 400 points

Bond yields and therefore interest rates have been rising for more than two years as the US economy grew strong.

A2 Milk Co dropped 6.7 per cent to $9.53, Pushpay Holdings sank 6.2 per cent to $3.50 and Synlait Milk fell 5.4 per cent to $9.15.

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.

JPMorgan 's Jason Hunter thinks we may have seen the worst of the news from the bond market, as recent action leaves him "looking for yields to form a bullish reversal pattern near current levels and define the cheaper end of the fourth-quarter 2018 to first-quarter 2019 range".

Earlier on Thursday, the SPI200 futures contract was down 109 points, or 1.81 per cent, to 5,914.0 at 7am AEDT, pointing to bleak open for the ASX, which had clawed back some ground on Wednesday after a turnaround in financial stocks and a strong performance by the healthcare sector. Meanwhile, the Nasdaq Composite dropped 315.97 points, or 4.08 percent, and the Dow Jones Industrial Average was down 831 points, or 3.15 percent.

Wall Street stocks plunged Wednesday, with major indices losing more than three percent in a selloff prompted by the sudden jump in United States interest rates.

Microsoft lost 1.4 per cent in early trading Wednesday and 3M gave up 1.6 per cent.

The Dow Jones Industrial Average gave up 738 points, or 2.8 percent, to 25,686. The Nasdaq dropped more than 4% in the worst percentage decline since June 2016.

Fear over higher rates is being best expressed in the bond market where prices have slid lower for weeks.


"As stocks go up, tech goes up more than the stock market". Brent crude, the worldwide standard, lost 2.2 per cent to $83.09 a barrel in London.

Tech stocks and companies that sell non-essentials to consumers have been some of the top performers over the past year, gaining almost twice as much ground as the S&P 500. The two-year yield rose to 2.88 percent from 2.87 percent, and the 30-year yield climbed to 3.38 percent from 3.37 percent.

Trade-sensitive industrial stocks also fell as tensions between Washington and Beijing persisted.

The S&P 500 fell 54 points, or 1.9 percent, to 2,825. Natural gas rose 0.6 percent to $3.28 per 1,000 cubic feet.

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

The CAC 40 in France dropped 2.1 per cent, Germany's DAX lost 2.2 per cent and the FTSE 100 in London fell 1.3 per cent.

Roberts described the fall as a slight correction and said he hoped markets would recover similar to what had happened in February and March this year after a dip in the markets also sparked by rising bond yields.

When investors expect rates to rise, the prices of bonds paying lower interest rates falls.

The euro and sterling rose, underpinned by optimism for a Brexit deal, while the USA dollar lost ground against a basket of currencies even as US yields hovered near multiyear peaks.

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