Dow Falls 430 Points as Bond Yields Surge and China Tensions Grow

The Dow Jones Industrial Average was down by more than 600 points at one point on Wednesday

The Dow Jones Industrial Average was down by more than 600 points at one point on Wednesday

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Oct. 5, 2018.

The S&P 500 is on track for its fifth drop in a row and its biggest decline since April. And tech stocks got hit particularly hard.

"The direct concern is higher interest rates", said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

October has often been a nerve-racking month for investors, and this month is living up to that reputation.

The Dow Jones Industrial Average gave up 500 points, or 1.9 per cent to 25,926. The Dow's percentage decline doesn't crack the top percentage declines.

The 10-year Treasury yield rose to 3.22 per cent from 3.20 per cent late Tuesday after earlier touching 3.24 per cent.

USA stock indexes dived around 1 percent on Wednesday as worries over China and the impact of rising Treasury yields on global growth drove falls in luxury goods companies and chipmakers.

The CBOE Volatility Index rose seven points, or almost 44 per cent, to 22.96, going above 20 for the first time since April 11 and hitting its highest close since April 2.

Andrew Bascand, managing director of Harbour Asset Management, said the last time the New Zealand market dropped by this much in a day was probably in February when there was a similar period of rising bond yields.

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.

Which stocks are taking the big hits?

A lot of that was because of the so-called FAANG stocks - technology names such as Facebook, Amazon, Apple, Netflix and Google - flying into turbulence on Wednesday.

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Another policy up for discussion is a declaration committing to putting mental health on an equal footing with physical health. William and Kate have always been involved in mental health initiatives through their Heads Together campaign.

Wednesday's drop should be placed in perspective.

The S&P 500 posted 12 new 52-week highs and 47 new lows; the Nasdaq Composite recorded 12 new highs and 227 new lows.

US stocks are plunging toward their worst loss in six months on Wednesday as technology companies continue to take sharp losses.

Some of the big losers were stocks that have scored double-digits gains earlier in 2018.

The CBOE Volatility Index, Wall Street's "fear gauge", rose 3.18 points to its highest since June 25. It was showing signs of Greed just a month ago.

"I believe this selling is an overdone panic", Feinseth said.

Dow Jones is a stock market index that shows how 30 large, publicly owned companies based in the US.

Stocks and bonds traditionally have been in a tug of war for capital, but for the past 10 years bonds have had one arm tied behind their back, said Jack Ablin, chief investment officer and founding partner at Cresset Wealth Advisors in Chicago.

"The bottom line is that among the sector bifurcation, the Small Cap unwind, the surge in rates and the spiking U.S. Dollar (all of which we've touched on lately), there is plenty to push the "market" around", writes Instinet's Frank Cappelleri.

Bascand said outside the USA data was not so strong indicating global growth was no longer synchronised and stronger United States data was not necessarily a good thing for all as it meant higher interest rates.

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