Published: Sat, February 10, 2018
Business | By Max Garcia

Dow Jones down 1000 points as market extends losses

Dow Jones down 1000 points as market extends losses

The up-and-down swings followed a drop of 10 percent from the latest record highs set by major USA indexes just two weeks ago.

USA fund investors sucked $23.9 billion out of the stock market in the latest week, marking the largest withdrawals from those funds on record, but bulls were still encouraged by strength in the global economy and solid US corporate earnings. The Nasdaq and S&P 500 also jumped upward to end Friday, with 1.4 and 1.5 percent increases, respectively. "In January we talked about fear of missing out".

Fueling the topsy-turvy market have been indications of inflation on the horizon, including whether rising wages and an increase in the number of jobs added to the economy will prompt the U.S.

Discerning the root cause of the correction is almost impossible, but the likely culprit is that investors, for the first time in almost a decade, believe that central banks around the world will pull back on their recession-era easy money policies and raise interest rates to ensure that rapidly growing economies don't run too "hot". That means they are in what is known on Wall Street as a "correction," their first in nearly two years. Facebook and Boeing have both fallen sharply.

Federal Reserve to accelerate a rise in interest rates.

At the heart of this week's pullback in the market has been a rise in USA bond yields due to growing expectations that a robustly performing economy will lead to higher inflation and a steady rise in official interest rates over this year. Inflation can also send bond yields higher, which makes it more expensive for individuals, companies and even the USA government to borrow money.

European markets were also down on Thursday, after the Bank of England said it could raise interest rates in the coming months.

The indexes posted their biggest losses Monday and Thursday, falling around 4 percent each, with the Dow losing more than 2,000 combined points.

The Dow Jones industrial average was down 344.97 points, or 1.45 per cent, at 23,515.49, the S&P 500 down 32.27 points, or 1.25 per cent, at 2,548.73.

The market, now in its second-longest bull run of all time, had not seen a correction for two years, an unusually long time.

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The housing industry is solid, and manufacturing is rebounding.

Then, they can ease their policies that were put into place during the financial crisis. And major economies around the world are growing in tandem for the first time since the Great Recession. "This is just some healthy, and overdue, volatility to wring out any excess". That combination usually carries stocks higher.

Hanesbrands, which makes underwear, T-shirts and socks, reported a smaller profit than investors expected, and its forecast for the current year didn't live up to analysts' estimates either.

CNN and 24/7 News Source contributed information to this article. If rates rise quickly, that argument becomes much less persuasive. But the market turned lower by early afternoon.

Some of the market's biggest winners over the past year were leading the market higher. "It can take two to three weeks to work through the system". Australian shares lost 1.7 per cent and South Korea's KOSPI fell 2.3 per cent.

U.S. crude was down 2.17% to US$60.44 a barrel.

The pan-European FTSEurofirst 300 index lost 1.40 percent and MSCI's gauge of stocks across the globe shed 0.49 percent. That means a drop of 10 percent from a recent peak.

In currency markets, the dollar edged up to 109.18 yen from Thursday's 108.73 yen. The euro dipped to $1.2224 from $1.2263.

The local currency was trading at 77.89 United States cents at 1030 AEDT on Friday, from 78.25 on Thursday. That also sent the pound higher.

At 0700 AEDT on Friday, the share price futures index was down 82 points, or 1.41 per cent, at 5,730.

2 stocks sinking on an Amazon blow.

The markets could continue to trend higher if U.S. Treasury yields remain in a holding pattern. The yield on the 10-year note was as low as 2.04 percent as recently as September.

The benchmark S&P/ASX200 was down 93.9 points, or 1.59 per cent, at 5,796.8 points. The Nasdaq plummeted 275 points to close at 6,777.

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