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US-STOCKS-MARKETS
Dow ends brutal session with 3.2% loss; Nasdaq -4.1%
NEW YORK, Oct 11, 2018 (BSS/AFP) – Wall Street stocks plunged Wednesday,
with major indices losing more than three percent in a selloff prompted by
the sudden jump in US interest rates.
When all the dust settled after a brutal session, the Dow Jones Industrial
Average had lost 3.2 percent or 830 points to finish at 25,498.74, in the
biggest fall since February.
The broad-based S&P 500 slumped 3.3 percent to end at 2,785.68, while the
tech-rich Nasdaq Composite Index plummeted 4.1 percent to finish the session
at 7,422.05.
The Nasdaq decline was its worst in percentage terms since the surprise
Brexit vote in June 2016.
Losses were fairly broad-based, with tech companies Amazon and Microsoft
6.2 percent and 5.4 percent respectfully. Apple, Boeing, Nike and Visa all
tumbled more than four percent, while Caterpillar and 3M lost almost four
percent.
US stocks notched solid gains in the third quarter as investors brushed
aside worries about trade wars and focused on strong corporate earnings and
solid US economic data.
But stocks have been under pressure since the yield on 10-year US Treasury
bonds jumped above three percent last week, a sudden move that raised fears
of an overheating economy, speeding inflation and more aggressive Federal
Reserve interest rate increases.
“It’s shifting the tectonic plates,” said Jack Ablin, chief investment
officer at Cresset Wealth Advisors. “Equity markets have enjoyed capital
flows because bond yields have been so paltry. As rates move back towards
fair value, capital is going to flow eventually out of equity risk taking.”
The turmoil came a day after the International Monetary Fund slashed its
global growth forecast on worries about trade wars and weakness in emerging
markets.
Tom Cahill of Ventura Wealth Management said investors were also unnerved
by remarks from luxury company LVMH of a crackdown on some goods in China
amid the country’s bitter dispute with the United States.
“Two weeks ago this kind of news would not have affected the market,” he
said. “But since we are now in a corrective phase, any bad news accelerates
the decline.”
LVMH’s travails also raised worries about whether the prospects of luxury
brands are fading as the global economic outlook weakens. Among American
brands, Tiffany slumped 10.2 percent and Michael Kors Holdings fell 7.1
percent.
US airlines were another big loser, with American Airlines sliding 5.8
percent and Southwest Airlines 3.6 percent as a major US hurricane caused
flight cancelations in Florida.
BSS/AFP/HR/1055