US stocks suffer worst loss in eight months as tech companies plunge
US stocks suffer worst loss in eight months as tech companies plunge
AP File The interior of the New York Stock Exchange
11 October, 2018, 04:01
The Nasdaq composite, which has a high concentration of technology companies, had its biggest loss in more than two years.
Every S&P 500 sector fell heavily, with big-name technology stocks like Facebook and Apple among the biggest drags on the U.S. market.
Bangsund said the indiscriminate selling indicates that many nervous investors were unwinding positions despite strong earnings expectations.
United States stocks have plunged to their worst loss in eight months. The S&P 500 ended the day down 3.3 percent, representing a 4.95 percent drop from its September 20 record closing high. The Nasdaq composite dropped 173, or 2.2 percent, to 7,565.
Netflix shares fell by 6pc and have now fallen by 12pc in the last five days.
In the 1973-74 stock market crash, for instance, the S&P 500 peaked around 700 in December 1972, and then dropped a percentage point or two nearly every month through October 1973, a 15% decline overall.
Stocks are falling sharply on Wall Street as bond yields continue to rise, putting the S&P 500 index on track for its fifth drop in a row. On August 22, it exceeded the previous record length, which ran October 1990 to March 2000. The stock fell 15 per cent to 50 cents.
The Dow Jones Industrial Average gave up 831 points, or 3.15 percent, to 25,598. Chipmaker Nvidia dropped 5 percent. Amazon skidded 6.2 per cent to US$1755.25.
Stock in all 30 blue-chip index companies fell, with Boeing and Caterpillar dropping at least 3.8 per cent.
MARKETS ABROAD: Japan's Nikkei 225 added 0.2 percent, South Korea's Kospi dropped 1.1 percent and the Hang Seng in Hong Kong gained 0.1 percent. Berkshire Hathaway dipped 4.1% to $214.64 and reinsurer Everest Re slid 4.6% to $218.97.
Technology shares tumbled on fears of slowing demand, while bond yields ended lower after seeing multi-year highs earlier this week.
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.
Investors are leaning into safer stocks with steady dividends - utilities and consumer staples - and pulling out of the higher-paying, higher-risk stocks as other guideposts of growth, like the communication sector, tumbled.
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. Think of it this way, if the Treasury issues a $1000 bond paying 3 percent interest, investors will not pay $1000 for an older bond paying 2 percent interest.
Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices. They've also dropped more than the rest of the market so far this month.
Adams, of Bloomberg Intelligence, said investors have concerns about their future profitability, too.
"Amazon recently announced they were increasing wages, Facebook is spending a ton on security", she said.
Meanwhile struggling retailer Sears was in focus as the Wall Street Journal reported that it was preparing to file for bankruptcy.
The NZX50 fell 1.15 per cent last week and this week is down around 1.8 per cent.
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It followed a bleak session in Europe, where Germany's Dax and France's Cac 40 had each ended the day more than 2% lower. A move of more than two deviations, or 40 basis points now , leads to negative S&P 500 returns, Goldman says.
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