Dow Jones drops 832 points in third worst drop in history

Dwayne Harmon
October 12, 2018

The Dow Jones Industrial Average has fallen more than 500 points, just one day after the market was hit with its worst day since February. "The marked selloff in rates is the clear catalyst, though that reflects the slow-burning theme of the end of easy money". The Nasdaq composite index was off 43 points beflore climbing the same amount and the S&P 500 was down 15 before edging into positive territory. Also known as Wall Street's "fear index", the VIX tends to rise when stocks are down.

The tech sector was hit hardest, with Netflix down almost 7 per cent, Amazon down 5 per cent and Apple, Google and Facebook all down more than 3 per cent. "I think the Fed is out of control", the president said to reporters in the Oval Office. The Nasdaq's 2-percent drop pulled it 7.1 percent away from its high.

Bank shares were boosted as yields rose, with Citigroup and Bank of America seeing gains of 0.4 percent and 0.3 percent, respectively. As the base rate from the Fed increases, the value of existing bonds with low-interest drops, which means when bought they will yield higher given a lower base price (price you paid to acquire them).

Stocks were lower at the halfway point Thursday in volatile trading, with the Dow Industrials down more than 1,000 points over two days.

The Nasdaq composite, which has a high concentration of technology companies, suffered its biggest loss in more than two years and has dropped nearly 8 percent since the start of October.

The 10-year Treasury yield remained at 3.20 percent, about where it was late Tuesday, after earlier touching 3.24 percent.

Wall Street stocks has plunged with major indices losing more than three percent in a sell-off prompted by the sudden jump in United States interest rates. The Kospi in South Korea fell 3.6 percent to 2,148.97.

Technology and retail companies continued to stumble.

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Three of the biggest American banks-JPMorgan Chase, Citigroup, and Wells Fargo-will report their third-quarter results Friday.

Oil prices fell more than two percent as US stocks plunged, even though energy traders anxious about shrinking supply from Iran due to US sanctions and kept an eye on Hurricane Michael, which closed almost 40 percent of US Gulf of Mexico output.

Tokyo's Nikkei 225 gave up 3.9 percent to 22,591.10 and the Shanghai Composite lost 4.3 percent to 2,607.44.

"The market is starting to believe the Federal Reserve a bit more and starting to price [rate hikes] in", Mona Mahajan, US investment strategist at Allianz Global Investors, told The Post. Those stocks have made huge gains for years, but they're now out of favor. Wholesale gasoline, heating oil and natural gas also declined.

The markets landed in the red despite a government report that showed consumer prices rose 0.1 percent last month, less than expected.

In other metals trading, silver rose 2 percent and copper added 0.8 percent.

The Japanese yen strengthened 0.01 per cent versus the greenback at 112.29.

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