U.S. Stocks Fall Sharply, Tech Sector Leads Declines

11 October, 2018, 05:27 | Author: Regina Silva

Tech-related stocks were the biggest decliners, the sector shedding 4.0 per cent following an overnight USA session in which tech was badly hit, but the heavyweight financial and materials sectors were also deep underwater.

At the closing bell, the Dow Jones Industrial Average had lost 3.1% or 830 points to finish at 25,613.35, in the biggest fall since February.

"It's a risk-off environment as investors are focusing on spiking yields and taking profits off the table as they are concerned about whether the bull market is actually coming to an end", said Ryan Nauman, market strategist at Informa Financial Intelligence. The move particularly affects high-growth tech companies which have been a source of huge returns in recent months.

Once-highflying tech has led markets lower as yields rise, with the 10-year Treasury note's yield reaching its highest point in more than a decade yesterday. Concerns about consumer spending have also led to jitters about United States companies as they prepare to unveil results for the third quarter of the year over the coming weeks. It's fallen 6.3 per cent over the last five days.

Adams said those worries are affecting technology and consumer-focused companies as well even though companies such as Alphabet, Amazon and Facebook have long had very high profit margins.

AMD (NASDAQ:AMD) suffered an especially brutal day today with a drop of over 8 percent.

The S&P/NZX 50 index declined 19.16 points, or 0.2 per cent, to 9050.82.

The biggest driver for the market over the past week has been interest rates, which began spurting higher following several encouraging reports on the economy. She said they also fear that company profit margins will be squeezed by rising costs, including the price of oil.

Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles per hour.

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Every S&P 500 sector fell heavily, with big-name technology stocks like Facebook and Apple among the biggest drags on the United States market.

For example, a yield rise in a month of one standard deviation or less, which would be 20 basis points now, is manageable for stocks, Goldman said in a note last week.

SEARED: Sears Holdings nosedived after the Wall Street Journal reported that the struggling retailer hired an advisory firm to prepare a bankruptcy filing that could come within days.

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.

Although that's largely because the United States economy is so strong, the spike in rates for the benchmark USA 10-Year Treasury has investors wondering if the near-decade-old bull market may finally be ending. The Labor Department said its index of producer prices has climbed 2.6 percent over the last 12 months, the smallest increase since January. The current benchmark interest rate is 2 to 2.25 percent. The energy sector was close behind with a 2.9 percent loss, as oil extraction in the Gulf of Mexico shutting down due to the hurricane.

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.

Stocks from emerging markets were also hard hit.

Rising interest rates make bonds more attractive relative to riskier stocks. Brazil's Bovespa lost 2.5 percent and the Merval in Argentina sank 2.2 percent.

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