Published: Thu, October 11, 2018
Economy | By

U.S. Stocks Fall Sharply, Tech Sector Leads Declines

U.S. Stocks Fall Sharply, Tech Sector Leads Declines

In its steepest decline since March, the Dow Jones industrial average dropped more than 800 points.

But stocks have been under pressure since the yield on 10-year US Treasury bonds jumped above three percent last week, a sudden move that raised fears of an overheating economy, speeding inflation and more aggressive Federal Reserve interest rate increases.

Losses were fairly broad-based, with tech companies Amazon and Microsoft 6.2 per cent and 5.4 per cent respectfully.

The S&P 500 ITI fell by 4.8 percent as a whole and much of that is attributable to the heavyweight stocks that fell today.

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.

The tech sector has slid 5.5 per cent so far this month, already its worst since August 2015, and at current levels has lost out to healthcare as the best-performing S&P sector in 2018.

The Dow fell 831 points, or 3.1 percent, to 25,598. Technology companies were among the losers, with the Nasdaq Composite dropping more than 2% to 7,575.34.

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.

Adams, of Bloomberg Intelligence, said investors have concerns about their future profitability, too. Technology stocks fell especially sharply. It was at just 3.05 percent early last week. On Wednesday, the 10-year yield once again touched its highest level in seven years. Over the years, Sears has closed hundreds of stores and sold several famous brands. Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks.

CVS dipped 0.1 percent to $79.40 and Aetna added 0.5 percent to $204.64. Heating oil fell 1.2 percent to $2.39 a gallon. The Nasdaq composite fell 152 points, or 2 percent, to 7,585.

Gold rose 0.2 percent to $1,193.40 an ounce.

Wall Street stocks plunged on Wednesday (Oct 10), with major indices losing more than 3 per cent in a sell-off prompted by the sudden jump in United States interest rates.

When investors expect rates to rise, the prices of bonds paying lower interest rates falls.

The CAC 40 in France dropped 2.1 per cent, Germany's DAX lost 2.2 per cent and the FTSE 100 in London fell 1.3 per cent. Citing concerns about trade and emerging markets, the worldwide lender lowered its global growth forecast for this year and next in a report. Brazil's Bovespa lost 2.5 percent and the Merval in Argentina sank 2.2 percent.

The Australian dollar slipped against major currencies, down to 70.7 U.S. cents, 53.6 British pence, 61.4 Euro cents and 79.5 Japanese yen. The euro rose to $1.511 from $1.1496 late Tuesday, and the British pound rose to $1.3175 from $1.3146.

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