US stocks are plunging toward their worst loss in six months on Wednesday as technology companies continue to take sharp losses. Futures point to a 0.5% fall for the S&P 500, a 0.5% decline for the Dow Jones Industrial Average and a 0.7% drop for Nasdaq.
But stocks have been under pressure since the yield on 10-year US Treasury bonds jumped above three percent last week, a sudden move that raised fears of an overheating economy, speeding inflation and more aggressive Federal Reserve interest rate increases.
"The tax cuts juiced earnings this year and that's not sustainable", he said. "As stocks go down, tech goes down more than the stock market", she said.
The benchmark S&P 500 dropped below its 200-day moving average price, while the Dow Jones Industrial Average slipped below its 100-day moving average.
At 11:22 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index was down 123.08 points, or 0.79 per cent, at 15,392.22. It's fallen 7.5 per cent in just five days.
Stocks recouped early losses Thursday after Wednesday's sell-off spilled over into global markets overnight ー first in Asia, where all the major indices were down at least 3 percent, then to Europe, where markets were lower by around a percent in afternoon trading. Markets are still rattled and they appear headed for a second day of significant losses.
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Microsoft dropped 5.4 percent to $106.16.
The tech sector was hit hardest, with Netflix down almost 7 per cent, Amazon down 5 per cent and Apple, Google and Facebook all down more than 3 per cent. Amazon skidded 4.8 per cent to $1,781.21 (U.S.).
The latest drop in crypto and the stock market has created opportunities for short-term investors.
Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles an hour. Berkshire Hathaway dipped 4.7 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73. Tiffany plunged 10.2 percent to $110.38 and Ralph Lauren fell 8.4 percent to $116.96.
The 10-year Treasury yield remained at 3.20 percent, about where it was late Tuesday, after earlier touching 3.24 percent. It was at just 3.05 per cent early last week and 2.82 per cent in late August.
Bond yields and therefore interest rates have been rising for more than two years as the US economy grew strong. When yields rise for that reason, it is generally good for stocks. Higher rates can also slow economic growth, making it more expensive for businesses to borrow and for consumers to spend.
Rising government bond yields have made them more attractive, leading investors to pull money out of equities.