Dow Jones sees biggest drop since 2016

03 February, 2018, 11:28 | Author: Barbara Daniel

More: 401 (k) investors: Is a "melt-up" happening in the stock market?

The eight other times the Dow closed more than 600 points lower all took place in the last 18 years. The index has lost 3.9 per cent since hitting a record high a week ago.

The S&P 500 fell 59.85 points, or 2.1 percent, to 2,762.13, and the tech-heavy Nasdaq composite index dropped 144.92 points, or 2 percent, to 7,240.95. The yield on the 10-year Treasury note, a benchmark for interest rates on many kinds of loans, including mortgages, climbed to 2.84 per cent, the highest level in roughly four years. The 3 percent yield is looked at as a key threshold that can drive investors out of equities and into bonds. The dollar gained on expectations of more Federal Reserve interest rate hikes, while oil prices slid. The government's latest job and wage data stoked those concerns Friday. Investors said the drop could be a sign of the market returning to more typical periods of peaks and troughs after abnormally calm conditions previous year.

"It's a legitimate concern, when inflation spikes up a little bit, that people should evaluate how is this going to affect profits and how is this going to affect the Fed", said Jonathan Golub, chief US equity strategist at Credit Suisse. The tandem selling accelerated after Dallas Fed President Robert Kaplan suggested officials may need to hike more than three times this year to cool the advance.

USA employers added a robust 200,000 jobs in January, slightly above market expectations for a 185,000 increase.

Japan's 10-year yield dipped one basis point to 0.086 percent.

Friday's significant market dent comes after a week-long downwards spiral. The company's stock dropped 5.3 percent on the back of the report.

"It's appealing, these 2 to 3 per cent pullbacks", said Thooft, who had been trimming some of his stock holdings after the market's big January gains.

That's good news for Main Street USA, but not for Wall Street.

"This is a continuation of weakness we saw earlier this week", Schulze said". "I think that is a bit much for the stock market to handle".

"The fundamentals are still OK", said Patrick O'Hare, chief market analyst at the investing website Briefing.com. "It's not something that is very surprising, given the low amount of volatility that we saw in 2017".

Some investors called the tail-end of the bull market a "melt-up" - with United States shares continuing to rise despite looking overpriced by traditional yardsticks, warning it was a last hurrah before a downward correction or crash. "We don't really expect a bear market unless there is a turn in the economy, which we are not seeing right now".

One bright spot was Amazon, which rose 4.1 per cent after the online retailer reported a record profit of about $2 billion due to strong sales and tax law changes.

Traders and financial professionals work on the floor of the New York Stock Exchange on January 31, 2018.

All of the S&P 500 companies together are expected to show earnings of about $155 per share this year in aggregate, up about $9 since December 20, Thomson Reuters' estimates show. "You usually have a correction of that magnitude every 90 to 120 days".

"Don't try to time the market", he said.

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