US stocks fall 4% as sell-off deepens

US stocks fall 4% as sell-off deepens

US stocks fall 4% as sell-off deepens

United States stocks overturned early losses to trade higher today as some buyers returned to a market still shaking from a record fall for the Dow Jones Industrial Average earlier this week.

As the stock market fell on Monday, the White House said the fundamentals of the US economy are strong. European indexes were down about 2 percent, while Japan's Nikkei lost 4.7 percent. Benchmarks in Australia, South Korea and Southeast Asia also retreated.

"It's been a insane period and today the market is probably just trying to find some footing", said John Lynch, chief investment strategist at LPL Financial in Charlotte, North Carolina.

"I think we are in a changing environment where it looks like we're going to have a bit higher inflation and so that has markets on edge", Gus Faucher, chief economist of the PNC Financial Services Group, told NPR's Windsor Johnston. "With financial markets vulnerable at the moment, this was not great timing for such political brinksmanship".

Despite Thursday's downturn, stocks remain in a bull market than began in March 2009. Several Dow members lost more than five percent, including American Express and Home Depot.

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Today that dramatic fall was mirrored by other markets worldwide, with the FTSE suffering a 3.5 percent drop on opening.

Some investors, however, fear the market is over-stretched in the context of higher inflation and rising bond yields as central banks withdraw their easy money policies of recent years. The so-called fear gauge tracks traders' expectations for future instability and moves opposite the S&P 500 most of the time. That's less than the 10 per cent drop that is known on Wall Street as a "correction".

The Dow fell 1,032.89 points Thursday to 23,860.46, which is 10.4 percent below its record close of 26,616.71 set on January 26. Boeing, Goldman Sachs and Home Depot took some of the worst losses.

While the more than 1,000 point tumble in the Dow Jones industrial average led the market lower, the USA dollar's weakening against the Japanese yen also hurt export manufacturers' shares.

The S&P energy index was up more than 1 per cent, led by Anadarko Petroleum's 5 per cent gain and an uptick in oil prices.

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The S&P 500 also went up by 1 percent or 27 points to 2,676 points.

KOTOK: This stock market sell-off has now corrected prices back to the level that preceded the passage of the tax bill.

Though many stock indexes are close to where they started the year, the losses mark a reversal of fortune following a sustained period of gains, a pullback that some market pros have been predicting for some time. If it is able to sustain above 24,500 we could see a new clear bottom, or a double top. "However, our view remains that it's just another correction", said Shane Oliver of AMP Capital in a report. Employers are hiring at a healthy pace, with unemployment at a 17-year low of 4.1 percent.

William Dudley, the president of the Federal Reserve Bank of NY, said separately at a forum in Manhattan that he expected the turbulence to have virtually no effect for the economic outlook, although further deep declines could start to change the prognosis.

Stocks are not falling because investors have doubts about the economy.

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