Dow Jones plunges 800 points as tech stocks tumble

Cornelia Mascio
Ottobre 11, 2018

Jitters about those companies have led to this short-term fall, too, while drops were felt throughout the market.

U.S. stocks tumbled on Wednesday, with the S&P 500 marking its biggest daily decline since February 8, and technology stocks led the losses as rising U.S. Treasury yields sent investors fleeing from risky assets. Apple and Amazon both had their worst day in two and a half years.

Wall Street stocks plunged Wednesday, with major indices losing more than three percent in a selloff prompted by the sudden jump in United States interest rates.

"A sustained rise in rates is probably reflective of improving economic conditions, so that in and of itself isn't necessarily a bad thing for stocks", said Willie Delwiche, investment strategist at Baird in Milwaukee.

"It is starting to influence the local market".

U.S. stocks have plunged to their worst loss in eight months.

Technology stocks slid more than 2 percent, the most among the 11 major S&P sectors, with the Philadelphia Semiconductor index down 3 percent after Swiss vacuum valve maker VAT Group said demand from chip equipment makers was softening. The benchmark index fell for the fifth straight day, which hadn't happened since just before the 2016 presidential election. The Nasdaq fell 315 points, or 4.1%, to 7,422.

Netflix shares fell by 6pc and have now fallen by 12pc in the last five days.

The Dow plunged almost 832 points on Wednesday, the third-worst point decline in history. The S&P 500 shed 1.53% to 2,839.43, on track for its steepest loss since June.

Rising bond yields are raising the cost of borrowing to add to market fears. Technology stocks fell especially sharply. Boeing lost 4.7 percent to $367.57 and Alphabet, Google's parent company, gave up 4.6 percent to $1,092.16. Concerns about consumer spending have also led to jitters about U.S. companies as they prepare to unveil results for the third quarter of the year over the coming weeks.

YIELDS: 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 10-year Treasury yield rose to 3.22 per cent from 3.20 per cent late Tuesday after earlier touching 3.24 per cent. The yield was just 2.82 percent in last August. Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week.

"Amazon recently announced they were increasing wages, Facebook is spending a ton on security", she said.

The S&P 500 posted 12 new 52-week highs and 47 new lows; the Nasdaq Composite recorded 12 new highs and 227 new lows.

Elsewhere, shares of Sears plummeted more than 37% after reports the cash-strapped retailer could file for bankruptcy protection as soon as this week. The stock fell 16.8 per cent to 49 cents.

Investors sold off United States government bonds, with the two-year yield touching its highest point since June 2008. Over the years, Sears has closed hundreds of stores and sold several famous brands.

The broader All Ordinaries was down 124.9 points, or 2.03 per cent, at 6,038.9, while the Australian dollar was buying 70.65 U.S. cents from 70.13 on Wednesday.

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