Wall St slumps again, Australian market set to follow

The Dow Jones industrial average closed down 4.2 per cent, to close at 23,860, on Friday morning New Zealand time, as investors continued to react to fears that interest rates may be on the rise.

Complacency had set in big time by February: After all, investors had cheered on the markets for more than a year and had come to expect that the good times would continue unabated. Forecasts from the Atlanta Federal Reserve suggest that the USA economy could grow by more than 5 percent during the first quarter, hefty growth that could push inflation figures higher and cause the Federal Reserve to get more aggressive with hiking lending rates.

Corrections are usually defined as a 10% decline from a recent or all-time high, while a bear market is a more sustained and deeper drop of 20%.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Trump has frequently taken credit for the rise of the stock market during his presidency, though the rally and economic recovery began during the Obama administration. A 3 percent yield is looked upon by investors as a motive for people to flee the risk of stocks for the relative safety of bonds.

All 11 major S&P sectors were lower, with the industrials and financial indexes leading the decliners. Shares of Dow component Boeing Co.

The Dow briefly sank 500 points in afternoon trading after surging more than 349 points earlier in the day.

“The market had gotten way ahead of itself”, said Nancy Tengler, chief investment officer of Heartland Financial. “The underlying fundamentals of the economy are really strong”. “You’re seeing real changes occur and different investments are adjusting to that”, O’Rourke said.

Thursday’s decline followed the largest drop in the Dow’s history on Monday when it fell 1,175 points or 4.6 percent.

Such 10 percent adjustments are frequent occurrences, analysts said, but the speed with which it has happened after a long stretch of record-breaking market highs can be unsettling to average investors.

Even with the sharp declines, stocks finished above their lows touched during the session.

At 6:40 a.m. EST: Dow e-minis were down 32 points, or 0.13 percent, S&P 500 e-minis were up 3 points, or 0.12 percent, and Nasdaq 100 e-minis were up just 9.5 points, or 0.15 percent.

USA stocks tumbled anew on Thursday in another trading session with big swings, as investors remained on edge after several days of volatile trading.

With Wall Street’s quarterly earnings season more than half-way through, about three-fourths of the S&P 500 companies that have reported so far have beaten profit expectations, above the 72 percent beat-rate in the past four quarters. Exchange-traded funds that focus on junk bonds suffered a third day of losses. Bond yields are rising.

The crucial question for today’s long-term investors, of course, is does the selling stop here or do we plunge another 10% or so into official bear market territory? “There’s kind of an emotional reversal that’s going on”. Other markets lost ground, with the Hong Kong Hang Seng index down 3.1 per cent and Japan’s Nikkei 225 index recording a loss of 2.3 per cent. Chipmaker Nvidia added $14.56, or 6.7 percent, to $232.08.

The pivotal gauge of S&P 500 volatility, the VIX.VIX, opened at a relatively elevated 31 points and slipped to 21.74.