Published: Sun, February 11, 2018
Economy | By

US Stock market plunges again, enters first correction in 2 years

US Stock market plunges again, enters first correction in 2 years

Following last year's three rate hikes, many now expect another three hikes in 2018.

Stocks are sliding further on Wall Street, putting the market on track for its second big weekly drop in a row. American Express and Intel were the worst-performing stocks in the index, sliding more than 5.4 percent. The company also issued a disappointing forecast.

People were in a panic after only two days of steep losses.

In one of the most brutal and volatile days reminiscent of the 2010 flash crash, the Dow Jones Industrial Average shed almost 1,600 points during trading on Monday, Feb. 5, 2018.

With Thursday's drops, the benchmark S&P 500 and the Dow industrials confirmed they were in correction territory, both falling more than 10 percent from January 26 record highs.

According to James G. Devine, a professor of economics, it is likely that stock prices were too high before the crash and this is only an adjustment, or "correction", toward what they should have been. The VIX, an index that measures traders' expectations of market volatility, was coming back with a vengeance. It spiked above 50 early on Tuesday.

"The market is probably trying to find a bottom", said Bill Lynch, director of investment at Hinsdale Associates.

In currency markets, the Canadian dollar closed at an average trading value of 79.46 cents United States, down 0.25 of a USA cent.

"We have historically low unemployment and we actually have increasing wages for American workers", Sanders said.

That's good for the economy, but investors anxious it will hurt corporate profits and that rising wages are a sign of faster inflation. "They love it, but they're also respectful and terrified".

Some major tech stocks, however, have largely been up for the year, outperforming the Dow or the S&P 500.

But stocks fought back Tuesday, with the Dow closing up 567 points, or 2.3%. The S&P 500 closed down 13 points, or -0.5%, after rising by as much as 0.7% earlier, and the Nasdaq finished down 63 points (-0.9%).

The Nasdaq is around five points higher at 7,121. That is big, but it is dwarfed by the lurching moves the market made the last few days.

Alexandra Coupe, associate director investment manager PAAMCO, said rising inflation makes stocks less attractive as a place to invest.

Bond yields reversed after a sharp drop Monday. The yield on the 10-year Treasury note rose to 2.86 percent.

The CAC 40 in France picked up 1.8%.

Other Asian share indexes also were lower, with Hong Kong's Hang Seng down 4.3 percent and Japan's Nikkei 225 3.2 percent lower.

Economically sensitive S&P materials, technology and consumer discretionary indexes advanced, while the rest sagged, led by a decline in rate-sensitive utilities, down 2.8 percent. The March copper contract was down one cent to US$3.08 a pound. It sank $1.35, or 2 percent, to finish at $65.51 a barrel in the previous session.

Wynn Resorts (WYNN.O) climbed 8.1 percent after casino mogul Steve Wynn resigned as the chief executive following sexual misconduct allegations.

Trump, who has repeatedly praised Wall Street gains during his first year in office, on Wednesday dismissed the recent rout in the markets, saying that stocks should not be falling amid strong economic news.

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