Dow sees worst day in two years as bond yields jump

03 February, 2018, 14:55 | Author: Teresa Adams
  • U.S. economy added 200,000 jobs in January

The picture of workers commanding higher salaries fueled expectations that inflation is on the rise, which could prompt the Federal Reserve to take a more aggressive approach to rate hikes this year.

The Dow Jones Industrial Average on Friday shed more than 1,095 points for the week, which would be its steepest weekly slide since October 10 2008, when it shed 1,874 points, according to FactSet data. The Dow and S&P 500 are down 3.4 percent and 3.3 percent, respectively, for the week, while the Nasdaq has lost 2.9 percent.

Stocks in Europe and on Wall Street plunged at least 1 per cent on the news, as the strong jobs and wage growth data boosted the chances of four Fed rate hikes this year, instead of the three hikes analysts had expected thus far. Apple, Google-parent Alphabet, Chevron and ExxonMobil all fell more than four percent.

The market drop came on a day when reports on increasing wages and tightening labor markets sent fears that interest rates will rise.

There is a prevailing view that stronger job growth and the Trump administration's tax reforms would raise inflation.

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The pan-European FTSEurofirst 300 index of leading regional shares lost 0.98 per cent and the STOXX 600 index tumbled 1.07 per cent. The 3 percent yield is looked at as a key threshold that can drive investors out of equities and into bonds.

Rising rates can be bad for stocks because as at some point higher yielding investments can be more attractive.

O'Hare said lackluster earnings added to the selling momentum, with some of the biggest USA companies suffering dramatic declines after disappointing the market.

The S&P 500 is up 88.52 points, or 3.3 percent. In Play Stocks are volatile enough to produce good risk and reward trading opportunities for both bull and bear traders intraday. In the three weeks through January 24, investors have pushed a net $18.3 billion into US stock funds this year, according to estimates from the Investment Company Institute.

The Canadian dollar was trading at 80.69 cents United States, down from Thursday's average price of 81.38 cents US. Brent crude, used to price global oils, fell $1.07, or 1.5 percent, to $68.58 a barrel in London. The euro weakened to $1.2440 from $1.2502.

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By points alone, this was the Dow's biggest loss since '08.

Germany's DAX Index sank 1.7 percent, the most since June.

BITCOIN: The price of bitcoin was down 0.5 percent to $9,006, according to the tracking site CoinDesk. Futures on Friday decreased 0.8 percent to settle at $1,337.30 an ounce.

Topix index fell 0.3 percent, Hong Kong's Hang Seng Index dropped 0.1 percent, the Kospi index declined 1.7 percent, Australia's S&P/ASX 200 Index rose 0.5 percent. Hong Kong's Hang Seng index dipped 0.1 percent.

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