US equity markets fall into correction territory

US stocks slumped into correction territory yesterday after the recovery on markets was derailed by tech titans Amazon and Google reigniting fears of corporate earnings reaching their peak.

Global stocks ended a rollercoaster week sliding deep into the red after the Silicon Valley giants missed Wall Street expectations in their third quarter updates.

Investors have been rattled this month by fears of rising borrowing costs and early signs of stellar corporate earnings in the US deteriorating. The S&P 500 tumbled as much as 2.8pc in the tech-led rout in New York to join the Nasdaq index in the feared territory. A correction is when an index falls more than 10pc from its 52-week high.

Chris Iggo at Axa Investment Managers said: “The tensions between a long list of global risks and the ability of investors to keep faith in a US expansion that is closing in on being 10-years in the making have triggered bouts of volatility.”

Investors are suffering a painful adjustment to “a world of quantitative tightening and a world where the best of corporate earnings growth is probably in the past”, he added.

The slide on Wall Street accelerated a sell-off on European markets as investors shrugged off figures showing US GDP growth slowing slightly to a still-strong 3.5pc in the third quarter of the year.

The FTSE 100 flirted with a 22-month low after sliding as much as 2.2pc in intraday trade. It clawed back to a 1.4pc loss at 6,939.56 after a late rally in European trading. The index has now suffered its worst month since the financial crisis while the Euro Stoxx 50, which tracks the top companies in the eurozone, has tumbled 15pc in the last year.