Published: Sun, February 11, 2018
Economy | By Melissa Porter

Dow Jones erases early losses

Dow Jones erases early losses

The VIX Volatility Index was lower at 27.73 for a loss of -2.25 points or -7.51%.

On Wall Street, traders took Monday's drop in stride, noting the tremendous changes in the markets since crashes like the one in 1987 that saw the Dow lose almost 23 percent of its value in a single day.

The Dow dropped 1,032 points, or 4.1 percent, to 23,860. The Dow and S&P 500 notched all-time highs as well as sharp gains for January.

The slump began Friday as investors anxious that higher inflation and interest rates could derail the long-running rally. The Nasdaq composite lost 101 points, or 1.4 percent, to 6,947.

The Dow was down 810 points, or 3.3 percent, to 24,088.

The Standard & Poor's 500 index, the benchmark most professional investors and many index funds use, sank 4.1 percent, to 2,648.94.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.87 percent.

Trump, who has repeatedly praised Wall Street gains during his first year in office, on Wednesday dismissed recent market rout, saying stocks should not be falling amid strong economic news.

The fall was the second-worst point drop in history - behind only Monday.

Monday's sell-off was driven by firms moving to sell stocks to put more money into assets such as bonds which benefit from higher rates, says Erin Gibbs, portfolio manager for S&P Global Market Intelligence.

While record low interest rates held, there has been much speculation about a bubble in the market as the Dow Jones has continued to climb, setting record highs. After that, trading isn't halted unless the S&P drops 20% - market crash territory. "If it now takes hold and gets out of control, central banks will be forced into action". Amazon rose 2.2 percent.

Some attribute it to enduring confusion among traders as to how to move forward.

US equities extended their losses in a week overtaken by wild swings in the stock market.

On Monday, S&P 500 biggest losing stock was Wells Fargo. The last market correction ended nearly two years ago. "We're starting to see the beginnings of inflation and that means that rates are on the way up", the analyst said.

The Mortgage Bankers Association's mortgage applications index increased 0.7% for the week.

The Dow Jones industrials are down 500 points, extending the market's losses.

Asian shares have opened lower and are tracking the overnight plunge on Wall Street. The surge in volatility also triggered massive selling in other volatility instruments. The March copper contract was down one cent to US$3.08 a pound. The Nasdaq composite lost 52 points, or 0.7 percent, to 7,189.

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