Sudden jump in USA interest rates prompts Wall Street stock plunge

Lloyd Doyle
October 11, 2018

The Dow Jones Industrial Average fell more than 800 points Wednesday, while the S&P 500 careened to its fourth consecutive loss and the Nasdag fell 4%.

The losses were widespread, and stocks that have been the biggest winners on the market the last few years, including technology companies and retailers, suffered steep declines. Amazon lost 6.2% and Netflix gave back 8.4%.

The blue-chip index plunged more than 830 points - or 3.2 percent - at its close as traders fretted about raising interest rates and the sell-off of once-high-flying tech stocks.

In only seven trading sessions this month, yields on 10-year U.S. Treasuries have climbed about 18 basis points and crested over 3.20 per cent, hitting their highest levels in more than seven years.

The S&P 500 and tech-heavy Nasdaq joined in Wednesday's carnage, falling 3.3 percent and 4.1 percent, respectively.

The small-cap Russell 2000 index, less sensitive than its larger peers to global worries such as trade and yields, was down 1 per cent at 1,605.60 points, below its 200-day moving average.

Intel fell 2.6 percent and Nvidia 4.4 percent.

The biggest driver for the market over the last week has been interest rates, which began spurting higher after several encouraging reports on the economy.

Adams, of Bloomberg Intelligence, said investors have concerns about their future profitability, too. That didn't happen Wednesday as stocks fell further late in the day. Think of it this way, if the Treasury issues a $1000 bond paying 3 percent interest, investors will not pay $1000 for an older bond paying 2 percent interest.

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. The Nasdaq composite fell 152 points, or 2 percent, to 7,585.

Wall Street stocks has plunged with major indices losing more than three percent in a sell-off prompted by the sudden jump in USA interest rates.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices. Heating oil fell 1.2 percent to $2.39 a gallon.

Gold was flat at $1,191.50 per ounce.

CVS dipped 0.1% to $79.40 and Aetna added 0.5% to $204.64.

The Dow Jones Industrial Average lost 342 points, or 1.3 percent, to 26,090. All this means that bonds, backed by the U.S. government, have become more attractive and thus many investors are turning to them as a risk-free investment. Citing concerns about trade and emerging markets, the worldwide lender lowered its global growth forecast for this year and next in a report.

The Australian dollar slipped against major currencies, down to 70.7 United States cents, 53.6 British pence, 61.4 Euro cents and 79.5 Japanese yen.

In London, the FTSE 100 was down by 1% as hopes of a Brexit deal lifted the pound - weakening the sterling value of earnings for numerous global index's multinational constituents.

Other reports by Iphone Fresh

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