US stocks see second major fall in a week

US STOCKS plunged into the red again last night as a fresh sell- off ripped through global markets.

After another day of rollercoaster trading, the Dow Jones index tumbled sharply to close down 4.2 per cent – dropping by more than 1,000 points for the second day this week. And £701billion was wiped off the S&P 500 index, which closed down 3.75 per cent.

Investors are fretting over rising inflation and global debt amid fears that the era of easy money from central banks is coming to an end.

The US stock markets swung wildly yesterday, falling in early trading before a brief recovery. In the last two hours a steep fall began which turned into a rout.

The Dow is now at 23,860.46 points, the first time it has dropped below 24,000 since late November.

Computer algorithms which make trades on the volatility are being blamed for exacerbating fears over interest rates and rising bond yields in the US.

In Britain yesterday, just 11 blue- chip stocks clawed their way into positive territory and the FTSE 100 closed down 1.5 per cent.

Currency markets also struggled. The pound see-sawed after the Bank of England suggested interest rates could be hiked in coming months, before ending the day near where it started.

The turmoil has been triggered by speculation that the era of life support from central banks which has prevailed since the financial crisis is ending.