Dow falls 832 points in third-worst day by points ever
- Author: Eleanor Harrison Oct 12, 2018,
Oct 12, 2018, 2:51
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 Dow Jones Industrial Average was down another 150 points in early trading as investor concerns over rising interest rates and the trade war with China continue to mount, but rebounded quickly, moving into positive territory within 25 minutes as bargain hunters emerged. Nasdaq composite, which has a high concentration of technology stocks, tumbled 244 points, or 3.2 per cent, to 7,495. Markets are still rattled and they appear headed for a second day of significant losses. Tech stocks saw slight recoveries as well after being hit hard on Wednesday.
It sets up the Australian sharemarket for steep losses to open the session, with futures at 7:35am AEDT pointing to a fall of 109 points, or 1.8 per cent, at the open.
Paint and coatings maker PPG gave a weak third-quarter forecast Monday, while earlier, Pepsi and Conagra's quarterly reports reflected increased expenses. "In these kinds of moves, it usually takes three days to wash out".
The tech-heavy TWSE index in Taiwan plummeted 6.3 percent, while Japan's Nikkei slid almost 4 percent and the South Korean KOSPI index dropped 4.4 percent as foreign investors pulled out.
The technology sector, the biggest loser in Wednesday's sell-off, closed down 1.3 percent on Thursday.
Gina Martin Adams, chief equity strategist for Bloomberg Intelligence, said the stocks have become more volatile in the last few months because investors have concerns about their future profitability.
Bond prices rose as the recent surge in yields attracted the attention of some investors.
Amazon has soared 50 percent this year, but its stock has fallen 14 percent from its all-time high in early September.
The drop led a wider drop in U.S. markets.
Bank shares were boosted as yields rose, with Citigroup and Bank of America seeing gains of 0.4 percent and 0.3 percent, respectively.
In midday trade, Wall Street remained lower as risk-appetite showed no signs of picking up. A report showing only a modest pickup in consumer prices seemed to calm investors just before the open. Also known as Wall Street's "fear index", the VIX tends to rise when stocks are down.
Japan's benchmark fell by an unusually wide margin of 3.9 percent and China's main index lost 4.3 percent.
The 10-year Treasury note yield traded around 3.23 percent, while the two-year yield reached its highest mark since 2008.
The Dow Jones Industrial Average lost 101 points, or 0.4 percent, to 25,497.
The S&P 500 posted no new 52-week highs and 62 new lows; the Nasdaq Composite recorded 6 new highs and 291 new lows.