Date
17 February 2018
Following Thursday's slide, major US indexes are down more than 10% from their Jan.26 all-time highs, meaning the market is now in correction territory. Photo: Reuters
Following Thursday's slide, major US indexes are down more than 10% from their Jan.26 all-time highs, meaning the market is now in correction territory. Photo: Reuters

US stocks plunge again; market in correction territory

US stocks suffered another big selloff on Thursday, with the Dow Jones Industrial Average tumbling more than 4 percent, as investors fretted about rising bond yields and the market’s recent volatility.

The Dow finished 1,032.89 points, or 4.15 percent, lower at 23,860.46, while the S&P 500 index was down 100.66 points, or 3.75 percent, at 2,581.

Following the latest slide, the key indexes are down more than 10 percent from their Jan. 26 all-time highs, meaning the market is now technically in correction territory.

The Nasdaq Composite shed 3.9 percent.

“The dust hasn’t settled yet, and I think both buyers and sellers are trying to figure out what this market really wants to do,” Jonathan Corpina, senior managing partner for Meridian Equity Partners in New York, told Reuters.

“I would think that this continues to happen for the next few trading sessions for everything to kind of get flushed out.”

The sharp selloff in recent days was kicked off by concerns over rising inflation and bond yields, with investors pointing to additional pressure from the violent unwinding of trades linked to bets on volatility staying low.

Equities for years have looked relatively attractive compared to the low yields offered by bonds, but the rise in Treasury yields has diminished the lure of stocks, especially with stock valuations at historically expensive levels, Reuters noted.

On Thursday, the 10-year US Treasury note yield rose as high as 2.884 percent, nearing Monday’s four-year peak of 2.885 percent, after the Bank of England said interest rates probably needed to rise sooner than previously expected.

“What we’re seeing today is continued concerns around interest rates going higher, around valuations in the stock market,” Reuters quoted Chris Zaccarelli, chief investment officer with Independent Advisor Alliance in Charlotte, North Carolina, as saying.

On Thursday, all 11 major S&P sectors finished lower, with financials and technology the worst-performing groups. All 30 components of the blue-chip Dow finished negative.

The slide put the S&P 500 back into negative territory for the year, down 3.5 percent.

Investors are weighing whether the sharp swings this week are the start of a deeper correction or just a temporary bump in the prolonged bull market.

Volatility remained high compared to recent months. The market’s main gauge of volatility, the Cboe Volatility Index (VIX) rose 5.73 to 33.46, about three times the average level of the past year.

About 10.6 billion shares changed hands in US exchanges on the day, well above the 8.2 billion daily average over the last 20 sessions.

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RC

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