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Nikkei plunges by over 1000 points in afternoon trading

12 October, 2018, 04:41 | Author: Shawna Walton
  • Why Howard Marks is cautioning investors

The Dow Jones Industrial Average plunged more than 800 points, its worst drop in eight months, led by sharp declines in technology stocks.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy.

The S&P 500 index sank 94.66 points, or 3.3 percent, to 2,785.68.

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

Shares in Facebook, Amazon, Apple, Netflix and Google's parent company Alphabet - the so-called "FAANG" stocks that have driven USA markets to all-time highs recently - all fell in NY trading.

Gina Martin Adams, the chief equity strategist for Bloomberg Intelligence, said investors are concerned about the big increase in yields, which makes it more expensive to borrow money.

The declines - which brought the major indices to their lowest levels in months - came as US President Donald Trump repeatedly castigated the Federal Reserve for lifting interest rates, sparking worry that the US central bank's independence from politics could be compromised. "They're so tight. I think the Fed has gone insane", he told reporters while traveling in Pennsylvania on Wednesday.

The Nasdaq composite, with a large contingent of tech stocks, tumbled 315.97 points, or 4.1 percent, to 7,422.05.

Bank shares were boosted as yields rose, with Citigroup and Bank of America seeing gains of 0.4 percent and 0.3 percent, respectively. That will raise the cost of corporate borrowing and could drag on economic growth.

The Dow Jones Industrial Average fell 545 points after dropping 831 points Wednesday. The yield on the benchmark 10-year note dropped to 3.13 percent.

That all played into a market that is increasingly anxious about global growth after warnings from the International Monetary Fund this week and a rise in Treasury yields to a more than 7-year high above 3 percent that signals a tightening of available capital globally.

Amazon's stock plunged 6.1 percent while Apple's stock shed 4.6 percent in a late-day sell-off. Technology companies and retailers, including longtime market favorites Apple, Alphabet and Amazon, continue to slide.

Earnings season kicks off with reports from JPMorgan Chase, Citigroup and Wells Fargo. Delta Air Lines shares rose 3.8 percent after the airline beat profit expectations. France's CAC 40 and the British FTSE 100 both dropped 1.9 percent and the DAX in Germany lost 1.5 percent. And there is still an overhang from the USA trade dispute with China, which accounts for sizeable portions of some tech companies' revenue. Those stocks have made huge gains for years, but they're now out of favor.

The rates rose Wednesday after the government released data showing the producer price index rose 0.2 percent in September and is up 2.8 percent on a year-over-year basis.

Wholesale gasoline lost 4.3 percent to $1.93 a gallon.

The dollar slipped to 112.17 Japanese yen from 112.27 yen late Wednesday.

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