Stocks tumble again, nearing a correction
Major indexes keep falling toward a correction, fueled by concerns over rising interest rates.
The Dow dropped 545 points Thursday, a day after sliding 832 points, as investors grapple with the effects of rising interest rates.
U.S. stocks fell sharply again Thursday in a volatile session as investors grappled with the question of whether rising interest rates could slow the U.S. economy’s growth and seriously disrupt the stock market’s years-long rally.
As President Trump continued to criticize the Federal Reserve — accusing the central bank of denting the market’s momentum by lifting short-term interest rates — the Dow Jones industrial average tumbled 545.91 points, or 2.1%, to 25,052.83. That extended a rout that began Wednesday, when the blue-chip index sank 832 points, or 3.1%.
The final two hours of trading Thursday reflected investors’ conflicted views of the market’s outlook. At one point, the Dow was down nearly 700 points, then rebounded for a while before sliding again in the minutes leading up to the closing bell.
“The bulls and the bears were really duking it out today,” said Matthew Peron, chief investment officer at City National Bank.
As investors sought refuge, the price of gold had its biggest single-day jump in two years.
The benchmark Standard & Poor’s 500 index dropped 57.31 points, or 2.1%, to 2,728.37, notching its sixth consecutive loss. That decline is the index’s longest since a nine-day skid shortly before the 2016 presidential election. It has climbed 27.5% since Trump was elected.
The tech-heavy Nasdaq composite index slid 92.99 points, or 1.3%, to 7,329.06; it has now skidded 9.6% from its record high of 8,109.69 reached Aug. 29.
When an index or stock drops 10% or more from its most recent high, the movement is what Wall Street dubs a correction, although others use the word to describe any significant pullback.
The Dow and the S&P 500 are down 6.6% and 6.9%, respectively, from their record highs.
The Russell 2000 index of smaller-company stocks entered official correction territory. It dropped 30.03 points, or 1.9%, to 1,545.38 on Thursday, down 11.2% from its Aug. 31 peak.
As the U.S. economy and corporate earnings continued to grow this year, the stock market has climbed. But the Federal Reserve — in an effort to prevent the economy from overheating and sending inflation sharply higher — has been raising its key lending rates.
That has helped lift the returns to be earned from bonds — the yield on the 10year Treasury note was 3.14% on Thursday, up from 2.3% a year earlier — and prompted stock investors to sell shares and take profits from the market’s runup.
The Fed’s moves also have annoyed Trump, who has routinely cited the stock market’s gains since his election as evidence that his economic policies have been effective.
After asserting Wednesday that the “Fed has gone crazy” with interest-rate increases, he told reporters Thursday that the stock market was in “a correction that I think is caused by the Federal Reserve with interest rates.”