US Market Indexes Fall Further, Dow Closes With -3.15% Loss

Virginia Carson
October 12, 2018

The Dow Jones Industrial Average dropped 546 points, a 2.13 percent decline.

"Equity investors are surprised by the pace at which rates have risen", Marcella Chow, global market strategist at J.P. Morgan Asset Management, said in a report.

All 30 Dow stocks were in the red, sending the index below 26,000 points for the first time in a month.

But Hogan said earnings were also a source of worry because they could showcase the consequences of Trump's trade wars for U.S. companies, from raising costs of raw materials to forcing enterprises to change supply chains.

Amazon lost 6.2 per cent and Netflix gave back 8.4 per cent. They also make bonds more attractive investments.

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President Trump blasted the Federal Reserve for raising interest rates. "They're so tight. I think the Fed has gone insane", he told reporters while traveling in Pennsylvania on Wednesday. Technology companies were among the losers, with the Nasdaq Composite dropping more than 2% to 7,575.34.

Bond yields and therefore interest rates have been rising for more than two years as the USA economy grew strong. Investors see many of these countries as being vulnerable to higher US interest rates, which can pull away investment dollars.

The Dow closed Thursday's session down 2.1 percent at 25,052.83, after dropping 3.1 percent on Wednesday.

The Nasdaq composite, which has a high concentration of technology companies, suffered its biggest loss in more than two years and has dropped nearly 8 percent since the start of October.

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". Heating oil fell 1.2 percent to $2.39 a gallon.

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After hitting an intraday high of 28.84, the CBOE Volatility Index, popularly known as the "fear gauge", ended the day up 2 points at 24.98, its highest close since February 12.

Technology and retail companies continued to stumble. France's CAC 40 and the British FTSE 100 both dropped 1.9 percent and the DAX in Germany lost 1.5 percent. Microsoft and Alphabet, Google's parent company, were little changed.

USA crude dropped 3 percent while Brent crude, the global standard, dropped 3.4 percent. Facebook, the sixth-largest company, has tumbled 29 percent since late July, surpassing the 20-percent threshold for a "bear market". After years of big gains, those stocks are now out of favor.

US stocks are tumbling for the second consecutive day as the market's recent downturn gets worse. Government data out a day earlier showed the producer price index rebounded to a seasonally adjusted 0.2% after two months of declines.

Wholesale gasoline lost 4.3 percent to $1.93 a gallon.

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The Japanese yen strengthened 0.01 per cent versus the greenback at 112.29.

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