Dow Jones Plummets Again On Worries About Inflation

Elias Hubbard
February 10, 2018

Wall Street strategists, however, remain steadfast in their view that the recent declines in the stock market do not mark the end of the bull market run we've seen since the financial crisis, and which accelerated in 2017.

For the second time this week, the Dow plunged more than 1,000 points.

In Toronto, the S&P/TSX composite index was down 264.97 points, or 1.73 per cent, to 15,065.61, in a broad-based decline. The Nasdaq lost 274 points, or 3.9 percent, to 6,777.

After a sharp loss Wednesday, benchmark US crude lost 76 cents, or 1.2 percent, to $61.03 a barrel in NY.

In what's been a historically volatile week for markets, each of the major USA averages lost more than 3.7% in trading on Thursday with the Dow's 4.15% decline - which was good for a 1,032-point loss - leading markets lower. "Longer term fundamentals are still good", she said.

"Seen over a longer period the correction in the stock market is relatively small and is likely to have no impact on the macro economy", said Torsten Sløk, chief global economist at Deutsche Bank, in a statement.

But economic experts are cautioning investors to avoid selling.

The stock market was due for a correction, but how long will this correction last?

"The U.S. economy is on solid foundation", said ClearBridge's Schulze.

As CNNMoney put it, "Fears about the bond market, inflation and interest rates seized investors again".

On Monday, the VIX had surged to its highest level since 2015.

The market opened little changed on Thursday but started to fall in early trading and extended its losses throughout the morning.

"The Dow has been hit by a tsunami of volatility", says Paul Schatz, president of Woodbridge, Conn. -based investment management firm Heritage Capital.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.86 percent from 2.83 percent.

Investors fear that low unemployment, increasing USA growth and rising wages will spur the Federal Reserve to raise interest rates, which would boost the cost of borrowing money.

After regular cash trading, S&P 500 e-mini futures edged down 0.2 per cent late on Thursday.

"In the context of the rises we've seen, certainly this kind of pull-back of 5-10% is quite normal for markets - it just hasn't been normal for the last couple of years where we've seen very low levels of volatility and very small levels of weekly or monthly moves". The stock dropped $27.21, or 30.9 percent, to $60.83.

Shares of the country's biggest marijuana producer, Canopy Growth, were up nearly 10 per cent. Brent crude, the global standard for oil prices, gave up 77 cents, or 1.2 percent, to $64.74 per barrel in London.

The Canadian dollar was trading at 79.80 cents United States, down from Monday's average price of 80.11 cents. Heating oil lost 1 cent to $1.92 a gallon.

'Despite this, in recent months, we have been expressing caution to investors in chasing the rally and have advised them to hold some cash on the side-lines instead for better buying opportunities. Australian shares lost 1.7 per cent and South Korea's KOSPI fell 2.3 per cent.

Other reports by Click Lancashire

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