US markets drop sharply as investors are spooked by rising rates

US markets drop sharply as investors are spooked by rising rates

US markets drop sharply as investors are spooked by rising rates

US stocks plunged Wednesday as investors, fearful that rising interest rates and trade tensions could hurt company profits, ramped up their selling of high-flying technology and internet stocks.

WINNERS AREN'T WINNING: Tech stocks and companies that sell non-essentials to consumers have been some of the top performers over the past year, almost doubling the performance of the S&P 500.

The U.S. stock market had its worst day since February, with major indices all plunging on rising interest rates and anxiety about tech investments, trade wars and the cost of Hurricane Michael.

After Trump's election, tens of billions of dollars in new money flooded into mutual funds, a trend that no doubt has contributed to the current bull market's unusual longevity. The Russell 2000 index of smaller-company stocks shed 37 points, or 2.3 per cent, to 1,584.

All 30 Dow stocks were in the red, sending the index below 26,000 points for the first time in a month.

The tech-heavy Nasdaq composite dropped 3.1 per cent.

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At the closing bell in the New York Stock Exchange on Wednesday, the Dow Jones Industrial Average had lost 3.1 percent or 830 points to finish at 25,613.35, in the biggest fall in eight months.

The benchmark ASX 200 has dropped 2 per cent on opening to 5,926, while the All Ordinaries index has slipped a similar amount to 6,034 points. "As stocks go down, tech goes down more than the stock market", she said.

It came after Wall Street stocks plunged Wednesday, with major indices losing more than three per cent in a sell-off prompted by the sudden jump in United States interest rates and increasing trade worries.

Although the losses were widespread, stocks that have been the biggest winners on the market, including technology companies and retailers, suffered steep declines.

The 10-year Treasury yield remained at 3.20 percent, about where it was late Tuesday, after earlier touching 3.24 percent.

The moves come as positive economic data - including the unemployment rate standing at 3.7 percent, its lowest level since 1969 - stoked investor fears that the Federal Reserve would raise rates aggressively to prevent the economy from overheating. The stock fell 15 per cent to 50 cents.

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Sears Holdings plunged 37 per cent after the Wall Street Journal reported that the struggling retailer is preparing a bankruptcy filing. It was more than $40 five years ago.

The Dow, the S&P and the Nasdaq all hit record levels between August 30 and October 3, even as the U.S.

Sears has closed hundreds of stores and sold several famous brands or put them on the block as it sees more customers abandon its stores.

Worries about inflation also tend to drive down the prices of bonds-and bond yields rise as bond prices fall. Brent crude, the worldwide standard, lost 2.2 per cent to $83.09 a barrel in London.

Consumer staples was one of the hardest-hit sectors, with names like Tiffany & Co.

Benchmark U.S. crude oil fell 2.4 percent to $73.17 a barrel in NY.

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There were, however, slight lifts for Japan's Nikkei, which added 0.2 per cent, and Hong Kong's Hang Seng, which gained 0.2 per cent. Investors see many of these countries as being vulnerable to higher United States interest rates, which can pull away investment dollars.

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