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Dow plunges 1175 points in worst day for stocks since 2011

09 February 2018

After its 1,175-point nosedive Monday, the Dow Jones industrial average sank an additional 567 points right after trading began Tuesday.

Major indexes in Asia and Europe sank Tuesday and USA markets started sharply lower, zigzagging between gains and losses.

Traders are bracing for volatility to stay high as they try to figure out if the swings of the past two days are the start of a deeper correction or just a temporary blip in the US market's nine-year bull run.

Nine of the 11 major S&P sectors were lower, with the industrials index's 0.57 per cent fall in early trade leading the decliners.

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At one point during the trading day it declined more than 1,500 points before recovering slightly. That meant Tuesday was likely to be one of the most watched days on the markets in years.

The Dow was down 501 points, or 2 percent, to 24,397.

Also Wednesday, Australia's S&P/ASX 200 gained almost 0.8 percent to 5,876.80. The last market correction ended nearly two years ago.

Thursday's market decline appeared once again tied to the increase in interest rates, with the 10-year Treasury yield touching 2.86% as investors continue to work out what a rising interest rate environment means for stocks after almost a decade of low, stable interest rates and low inflation.

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The Dow is 10 percent below the record high it set just two weeks ago, putting it in what is known on Wall Street as a "correction". The Nikkei index briefly surged more than 700 points.

You might have had day traders trying to get out at the end of the day. The Standard & Poor's 500 index, a broader market barometer tracked by many index funds, climbed 1.7 percent to 2,695.14.

The steep drops Friday and Monday wiped out the gains the Dow and S&P 500 made since the beginning of the year, but both remain higher over the past 12 months.

Wednesday's last-minute tumble "underscored the lack of conviction that still exists in the market, which is a byproduct of the market's stunning behavior since last Friday", said analyst Patrick O'Hare. The Nasdaq composite rose 2.1 percent to 7,115.88.

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Wrong-footed volatility bets, and not the notion that too much good economic news was rejected by financial markets, has become the dominating theory behind why markets tanked on Monday.

NEW YORK, Feb 8 (Reuters) - Stocks in world markets remained on shaky ground on Thursday, with major USA stock indexes falling more than 1 percent, as US bond yields crept back towards four-year highs.

The Dow Jones industrial average lost 1,032.89 points, or 4.1%, to 23,860.46. "When the feds start talking about raising interest rates like they have been doing for the past year it puts a damper on a lot of our expectations about how the economy is going to do I the next few years", said Nishimoto. The yield on the 10-year Treasury note, a benchmark for mortgages and other kinds of loans, rose to 2.84% from 2.81%. Even with the recent drop the market is more than 40 percent above its February 2016 level.

USA crude oil fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in NY.

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The third idea to understand is that any dramatic drop or rise in the stock market affects relatively few people in the U.S. Many families have no savings, and, among those that have saved, not all have invested in the stock market. Brent crude, the global standard for oil prices, dropped 15 cents to $65.36 per barrel in London. It fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in New York Tuesday.

Dow plunges 1175 points in worst day for stocks since 2011