Dow de­clines an­other 545 points amid fears about in­ter­est rates, trade

Chicago Sun-Times - - BUSINESS - BY MAR­LEY JAY As­so­ci­ated Press

NEW YORK — U.S. stocks sank more than 2 per­cent Thurs­day, the sec­ond day of steep de­clines around the globe driven by con­cerns about ris­ing in­ter­est rates and trade ten­sions that could slow eco­nomic growth.

The Dow Jones In­dus­trial Av­er­age fell 545 points after drop­ping 831 points Wed­nes­day. The two-day loss of 5.3 per­cent is the big­gest for Dow since Fe­bru­ary. The S&P 500 is also down more than 5 per­cent over the two days, and after fall­ing for the past six trad­ing days is al­most 7 per­cent be­low its Sept. 20 high.

The re­cent tur­bu­lence in fi­nan­cial mar­kets is a con­trast to what in­vestors have grown ac­cus­tomed to in a bull mar­ket that has lasted more than 10 years, the long­est in his­tory. A hall­mark of the past decade has been ul­tra-low in­ter­est rates, which the Fed­eral Re­serve used to pro­mote growth in the af­ter­math of the 2008 fi­nan­cial cri­sis.

The Fed has been grad­u­ally rais­ing in­ter­est rates over the past two years, after not hav­ing in­creased them since the re­ces­sion. Those higher rates have been the cat­a­lyst for re­cent sell­ing, stok­ing con­cerns that slower growth would im­pinge on cor­po­rate prof­its.

The sell­ing Thurs­day was widespread. En­ergy com­pa­nies sank along with oil prices and CVS led a rout in health care stocks. Tech­nol­ogy com­pa­nies and re­tail­ers ex­tended their re­cent slide.

“There isn’t much of a place to hide right now in the eq­uity mar­ket,” said Wil­lie Del­wiche, an in­vest­ment strate­gist at Baird.

Seek­ing safety, in­vestors bought gold and gov­ern­ment bonds. That pushed bond prices up and their yields down, end­ing a surge in yields that had touched off the mar­ket’s cur­rent de­cline.

There are on­go­ing con­cerns about the un­re­solved trade dis­pute be­tween the U.S. 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.


A trader works on the floor of the New York Stock Ex­change on Thurs­day as the ses­sion nears its end. The S&P 500 has de­clined for each of the last six trad­ing days.

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