Published: Fri, October 12, 2018
Money | By Hannah Jacobs

Wall St. extends slide with trade and rates in focus

Wall St. extends slide with trade and rates in focus

Those higher rates have been the catalyst for recent selling, stoking concerns that slower growth would impinge on corporate profits.

The U.S. Federal Reserve recently raised short-term interest rates for the third time this year, with one more expected before the year ends. They've also dropped more than the rest of the market so far this month.

"President Trump's scathing and ramped-up attack on the Fed has the dollar bulls retreating as even the hint of political interference on monetary policy is unsettling", Innes said.

"As stocks go up, tech goes up more than the stock market".

"It is a flawless storm for technology right now with the tariff war with China and weaker demand for chips", Nauman said.

"The direct concern is higher interest rates", said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey. The yield was just 2.82 percent in last August.

Amazon dropped another 3.4 percent to $1,694.01 and Apple fell 1.4 percent to $213.25.

Investors may want to shift out of momentum and into more defensive stocks - companies that aren't as expensive and also pay healthy, stable dividends.

Wall Street stocks plunged Wednesday, with major indices losing more than three percent in a selloff prompted by the sudden jump in US interest rates.

Stocks retreated Wednesday, with the Dow Jones industrial average losing more than 800 points in a selloff that accelerated in the final minutes of trading. The S&P 500 shed 1.53% to 2,839.43, on track for its steepest loss since June. The Nasdaq fell 315 points, or 4.1 per cent, to 7,422.

The stock fell 35.7 percent to 38 cents in morning trading. US markets rebounded briefly after it was announced that President Trump would meet with Chinese leader Xi Jinping at next month's G-20 summit in Buenos Aires to discuss the intensifying trade conflict. Amazon skidded 6.2 percent to $1,755.25 and Alphabet, Google's parent company, gave up 4.6 percent to $1,092.16.

The Nasdaq composite, which has a high concentration of technology companies, suffered its biggest loss in more than two years and has dropped nearly 8 percent since the start of October.

Markets in Europe came off their earlier losses after the inflation report.

"It's quite a challenge for stocks when there is no natural shock absorber from bonds", said Nicholas Colas, Co-founder of DataTrek Research.

The Japanese yen strengthened 0.01 per cent versus the greenback at 112.29. The euro rose to $1.1525 from $1.1496. Brent crude, the global standard, lost 2.2 percent to $83.09 a barrel in London.

"There is more optimism that they will find some agreement between Britain and the European Union before Brexit", said Steve Englander, global head of G10 FX research at Standard Chartered Bank in NY.

Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles an hour.

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