Another sharp drop officially puts Dow in market correction.

INDEX CLOSES DOWN 10.4% FROM RECORD HIGH IN JANUARY AFTER DAYS OF FEAR-LADEN TRADING TAKE THEIR TOLL

The dread t hat gripped equity markets earlier in the week re- emerged Thursday as U. S. stocks plunged into a correction on concern that rising interest rates will drag down economic growth.

Selling accelerated in the final hour of trading as major indexes breached roundnumber milestones they blew past just weeks ago. The S&P 500 tumbled through 2,600 and the Dow failed to hold 24,000. Both are headed toward their average price for the past 200 days, a level that technical analysts say may act as a magnet and a floor.

In the end, the S& P 500 sank 3.8 per cent, taking its rout since a Jan. 26 record past 10 per cent to meet the accepted definition of a correction. The negative superlatives are piling up quickly: the index erased its gain for the year to close at a twomonth low and is on track for its worst week since the height of the financial crisis. The Dow plunged more than 1,000 points for the second time in four days.

In Toronto, the S& P/ TSX composite index was down 264.97 points, or 1.73 per cent, to 15,065.61, in a broad-based decline. The TSX is down 8.2 per cent from its all-time high of 16,412.94, set Jan. 4.

Gold was the only positive sector on the commodity-heavy index on Thursday, as more investors shifted toward the safe- haven asset. The April gold bullion contract was up US$ 4.40 to US$1,319.00 an ounce.

On Wall Street, pressure again came from the Treasury market, where another weak auction put gave bond bears ammunition, sending the 10-year yield to the highest in four years. Equity investors took bond signal to mean interest rates will push higher, denting earnings and consumer-spending power.

For a market that hadn’t fallen 3 per cent from any high in more than a year, the week’s action was enough to rattle even the biggest equity bulls. Accustomed to buying the dip, that wisdom is now in question when more selling by speculators may be imminent.

“There’s some big- money players that have really leveraged to the low rates forever, and they have to unwind those trades,” said Doug Cote, chief market strategist at Voya Investment Management. “They could be in full panic mode right now.”

Stocks began to fall last Friday after U.S. jobs data showed wages growing more than anticipated, raising worries that creeping signs of higher inflation might push the U.S. Federal Reserve to increase interest rates more quickly. Many market watchers had also been predicting a pullback after the market’s relentless march higher over the past year.

“The strong headlines job numbers and strong wage growth that we saw last Friday have really seen investors worried about the threat of higher inflation and the prospect of higher interest rates in the U. S.,” said Candice Bangsund, a vice- president and portfolio manager at Fiera Capital in Montreal.

“And this has really triggered a spike in volatility because it’s brought into question where higher interest rates are going to curtail the global growth story or erode corporate profitability. So it’s really been very much a riskoff environment.”

Bangsund added there’s not been a lot of rational movements throughout the week’s market rout.

“You need to flush it out and give the markets a chance to reset. Longer-term fundamentals are still good,” she said. “Let this thing run its course. Leading up to this, investor bullishness was at extreme levels ... Our intention would be to buy the dip but we’re just not there yet.”

As the equity- selling intensified, haven assets grew attractive. Gold futures erased losses to push higher, the yen strengthened and even Treasuries pared the worst of their declines.

Volatility spread across assets. The Cboe Volatility Index was more than double its level a week ago. Ten-year Treasury yields fluctuated near their four- year highs, while the yen found traction as a haven from the stock turmoil. The VIX’s bondmarket cousin reached its highest since April. A measure of currency volatility spiked to levels last seen almost a year ago, with a plunge in the yuan and a rise in the pound adding to turbulence. European equities weren’t spared, with the Euro Stoxx 50 volatility gauge spiking toward the highest since June 2016.

The S&P 500 Index fell 3.8 per cent at the close in New York. The Dow Jones Industrial Average lost 4.1 per cent and the Nasdaq 100 Index fell 4.2 per cent. The Stoxx Europe 600 Index dipped 1.6 per cent. The U.K.’s FTSE 100 Index sank 1.5 per cent. The MSCI Emerging Market Index fell 1.2 per cent.

West Texas Intermediate crude declined 1.04 per cent to US$61.15 a barrel.

Gold fell less than 0.05 per cent to US$1,317.19 an ounce. Copper fell 0.5 per cent to US$ 6,845 per tonne. The Bloomberg Commodity Index fell 0.2 per cent.