Investors seek safety in gold and bonds
US stocks sank more than 2 per cent yesterday, the second day of steep declines around the globe driven by concerns about rising interest rates and trade tensions.
The Dow Jones Industrial Average dropped 546 points after dropping 831 points the previous day. The two-day loss of 5.3 per cent is the biggest for the Dow since February. The S&P 500 is also down more than 5 per cent over the two days and had declined for six straight days.
The selling was widespread. Energy companies sank along with oil prices and online pharmacy CVS led a rout in health care stocks.
Technology companies and retailers, including longtime market favourites Apple, Alphabet and Amazon, extended their recent slide.
Seeking safety, investors bought gold and government bonds. That pushed prices up and yields down, ending a surge in yields that had touched off the market’s current decline. But investors found more things to worry about.
There are continuing concerns about the unresolved trade dispute between the US and China. Strong earnings reports in the coming weeks could soothe investor nerves, but negative comments from company executives about future profits could have the opposite effect. Recently a larger-than-normal number of companies have warned that their third-quarter results could be weaker than analysts expected.
The benchmark S&P 500 index rose in morning trading, but ultimately gave up 2.1 per cent and closed at its lowest close in three months. The index fell 3.3 per cent the previous day and has declined 6.7 per cent during its current losing streak – its steepest downturn since a 10-per cent drop in early February.
The Dow Jones Industrial Average lost 2.1 per cent and the Nasdaq composite fell 1.3 per cent.
Friday’s losses in the US followed steep declines overseas. France’s CAC 40 and the British FTSE 100 both sank 1.9 per cent and the DAX in Germany lost 1.5 per cent. Tokyo’s Nikkei 225 gave up 3.9 per cent and Hong Kong’s Hang Seng index shed 3.5 per cent. The Kospi in South Korea fell 4.4 per cent.
Yesterday, Trump renewed his criticism of the Federal Reserve, blaming the recent downturn in the stock market on the Fed’s rate policy.
‘‘We have interest rates going up at a clip that’s much faster than certainly a lot of people, including myself, would have anticipated. I think the Fed is out of control,’’ the president said to reporters in the Oval Office.
Trump said he had no intention of firing Jerome Powell, who he appointed as Fed chairman in February.
Has the bubble burst? Trader James Lamb watches his screens on the floor of the New York Stock Exchange.