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

Dow plummets over 1000 points amid rising yields

Dow plummets over 1000 points amid rising yields

The VIX's bond-market cousin reached its highest since April.

The Dow Jones Industrial Average fell 282.86 points, or 1.11 percent, to 25,238.1.

Analysts said the rising bonds yields dented investor sentiment.

"However once this kind of stampede starts it's hard to stop".

The Dow Jones Industrial Average fell precipitously Monday afternoon, continuing a market correction that began Friday and interrupting consecutive months of uninterrupted growth.

With Wall Street's quarterly earnings season more than half-way through, 78.3 percent of the S&P 500 companies that have reported so afar have beaten profit expectations, above the 72 percent beat-rate in the past four quarters.

The selling has persisted into European trading hours, though at a more moderate pace. That's the equivalent of a 5,300-point decline today. Heating oil dipped 3 cents to $1.99 a gallon.

Gains in industrial and consumer discretionary stocks led advances on the S&P and the Dow. The recent rout has wiped about US$4 trillion (RM15.6 trillion) off world equities.

That has fed into widespread concerns that markets were stretched following a strong run over the past year that pushed many indexes to record highs.

"What we're seeing is an attempt at stabilization in USA equity prices following a very sharp selloff", said Peter Kenny, senior market strategist at Global Markets Advisory Group in NY.

In emerging markets, the South African rand fell 0.7 per cent and the Chinese yuan and Polish zloty 0.2 per cent.

"That is not to say that we won't see further falls in coming days, but in an environment where growth is good and earnings are expected to rise globally, there are decent underpinnings", said James Knightley, chief worldwide economist at ING. The S&P 500, the index that investors pay the most attention to, is in a correction, down 10.2 percent from its recent high.

Boeing (BA.N) and United Tech (UTX.N) rose about 1.5 percent, providing the biggest boost to the Dow, while Amazon's (AMZN.O) 1 percent rise helped lift the S&P.

By late morning Asian time benchmark USA crude had fallen 73 cents to $63.42 per barrel in electronic trading on the New York Mercantile Exchange.

Toronto's TSX index also felt the pressure, tumbling 271 points, closing at 15,334.81.

Wall Street anticipates that more government spending will force the Treasury Department to borrow more money by selling additional bonds. Gold was off at US$1,334.92 an ounce after losing 1 per cent on Friday.

This follows a rough day of trading in the States yesterday with the Dow Jones falling over 1,000 points and is now on track to suffer the biggest weekly decline it has seen since October 2008 - the height of the global financial crisis.

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