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techkenyot.com April 19, 2019


Dow Jones industrials sink 700 points as bond yields rise

11 October 2018, 01:59 | Hattie Nash

The Dow Jones Industrial Average has plunged more than 800 points, its worst drop in eight months, led by sharp declines in technology stocks.

Some of America's biggest tech stocks were caught up in the sell-off, with Netflix down 8%, Microsoft sliding 5%, Amazon off by 6% and Google's parent company Alphabet down 5%.

The broad-based S&P 500 slumped 3.3 per cent to end at 2,785.68, while the tech-rich Nasdaq Composite Index plummeted 4.1 per cent to finish the session at 7,422.05.

That all played into a market that is increasingly anxious about global growth after warnings from the International Monetary Fund this week and a rise in Treasury yields to a more than 7-year high above 3 percent that signals a tightening of available capital globally.

But historically, a monthly move of one to two deviations, or 20 to 40 basis points now, would result in flat S&P 500 returns.

The Dow Jones Industrial Average fell 109 points, or 0.4%, to 26322 shortly after the opening bell. The stock fell 34 percent to 38 cents in morning trading.

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U.S. Treasury yields held near multi-year highs after producer prices climbed 0.2 percent in September, feeding into the pressure on the Federal Reserve to continue to raise interest rates even as the global economy struggles with headwinds from President Trump's trade war with China.

Adams, of Bloomberg Intelligence, said investors have concerns about their future profitability, too. The stock fell 15% to 50¢. It was at just 3.05 per cent early last week and 2.82 per cent in late August.

In further evidence that stocks can rally despite rising Treasury yields, LPL Research found that in all 12 periods of rising 10-year yields since 1996, the S&P 500 ended the period higher than it began, according to senior market strategist Ryan Detrick. Over the years, Sears has closed hundreds of stores and sold several famous brands.

Luxury retailers tumbled. Tiffany plunged 9.5 percent to $111.28 and Ralph Lauren fell 7.3 percent to $118.42.

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.

The S&P 500 fell 39 points, or 1.4 percent, to 2,840. USA gold futures settled up $1.9, or 0.16 percent, at $1,193.4. Copper fell 0.9 percent to $2.78 a pound.

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Japan's Nikkei 225 added 0.2 per cent, South Korea's Kospi dropped 1.1 per cent and the Hang Seng in Hong Kong gained 0.1 per cent.

The increase in yields from these bonds - which are parcels of United States government debt - can hurt stocks since they will provide competition for investors' cash.

The Dow Jones Industrial Average lost 342 points, or 1.3 percent, to 26,090.

The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday.

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.

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