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Overnight Markets: US stocks plummet to close in correction territory

Asian equities follow with China’s Shanghai Composite Index trading nearly 4% down in early morning session on Friday.

 
Overnight Markets: US stocks plummet to close in correction territory

US stocks plummeted nearly 4% on Thursday in another dramatic session as investors continued to fret about the possibility of rising inflation and higher interest rates.

The Dow Jones Industrial Average plunged 1,033 points, or 4.15%, to 23,860, the S&P 500 lost 101 points, or 3.75%, to 2,581 and the Nasdaq Composite dropped 275 points, or 3.9%, to 6,777.

With the losses that accelerated late in the trading day, the benchmark S&P 500 and the Dow industrials confirmed they were in correction territory, both falling more than 10% from 26 January record highs.

 “The dust hasn’t settled yet, and I think both buyers and sellers are trying to figure out what this market really wants to do,” said Jonathan Corpina, senior managing partner for Meridian Equity Partners in New York.

The sharp selloff in recent days was kicked off by concerns over rising inflation and bond yields, sparked by Friday’s January US jobs report.

Earlier on Thursday, the 10-year US Treasury note yield rose as high as 2.884%, nearing Monday’s four-year peak of 2.885%, after the Bank of England said interest rates probably needed to rise sooner than previously expected.

Analysts at Barclays, Bank of America and JP Morgan estimate that volatility-targeting traders will sell roughly $200 billion of equities this week, leading to more pressures on markets.

All 11 major S&P sectors finished lower, with financials and technology the worst-performing groups. Amazon (AMZN.O) and Facebook (FB.O) were among the biggest drags on Thursday.

Shares in Tesla Inc. fell 8.6% after the maker of electric cars late Wednesday posted a narrower-than-expected adjusted loss for the fourth quarter.

21st Century Fox Inc. shares slid 4.2% after the media company reported better-than-anticipated earnings late Wednesday.

Shares of Twitter Inc. soared 12% after the microblogging company delivered better-than-expected financial results and reported its first-ever quarter of profitability.

Kellogg Co. reported fourth-quarter net income of $428.0 million, compared with a loss of$53.0 million for the same period last year. Its shares were up 2.8%.

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3 comments so far. Why not have your say?

alan franklin

Feb 09, 2018 at 07:22

As bubbles start to burst and easy credit dries up, QE goes into reverse and the over-borrowed everywhere are hit with rising interest rates, the only thing to buy is the one asset that stands the test of time. Gold.

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horshamtim

Feb 09, 2018 at 07:41

@alan franklin Unfortunately no - if only it was that easy. Apart from the fact that having a large gold exposure over the years has not been a way to get rich - in real terms it has not stood the test of time. At this moment the gold price is also down on the week. Absolutely no indication that people are stampeding into it. It earns you no dividends, and as it is priced in dollars, the movements here are often as much about the exchange rate as the intrinsic price. Holding physical gold ETFs (and for other precious metals) can be sensible as a stabiliser to a portfolio, but personally I wouldn't go much further than that. There is a real possibility this time round that the prices of all assets will fall together as QE unwinds - no one really knows as we are in uncharted territory.

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Andy Cap

Feb 09, 2018 at 09:35

Well as usual I shall just sit back and wait for the dust to settle, then carry on earning a good rate on a small range of quality Investment Trusts, managed by good solid Managers who aren't popping up every five minutes telling us where markets are going.

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