Stocks continued to suffer on Thursday, as worries about rapidly rising interest rates and a slowdown in global economic growth made investors jittery. The International Monetary Fund recently cut its global growth forecast to 3.7% for both 2018 and 2019. Also, growing tensions emanating from the trade dispute between the United States and China dented investor sentiment ahead of the earnings season kickoff. This led to huge selloffs with all major indexes ending in the red. The Dow has lost nearly 1,400 points over the last two trading sessions, while the S&P 500 extended its losses to the sixth consecutive day.
The Dow Jones Industrial Average (DJI) skidded 2.1%, to close at 25,052.83. The S&P 500 also slipped 2.1% to close at 2,728.37. The Nasdaq Composite Index closed at 7,329.06, declining 1.3%. The CBOE Volatility Index (VIX) ended the day up 2 points at 24.28, recording its highest close since Feb 12.
A total of 11.44 billion shares were traded on Thursday, its highest level since February and higher than the last 20-session average of 7.65 billion shares. Decliners outnumbered advancers on the NYSE by a 3.52-to-1 ratio. On Nasdaq, a 2.66-to-1 ratio favored declining issues.
How did the Benchmark Perform?
The Dow gave up 545.91 points, bringing its two-day losses to 1,378 points. The Dow fell as much as 698.97 points at one time before bouncing back on reports that President Donald Trump and Chinese president Xi Jinping would meet at next month’s G-20 summit. Shares of Intel Corporation INTC declined 1.3%.
The S&P 500 gave up 57.31 points, extending its losses to the sixth straight day, its longest losing streak since a nine-day losing streak in end November 2016. Also, the S&P 500 index closed below its 200-day moving average for the first time since April. All the 11 major S&P 500 sectors ended in negative territory, with energy and financials at the helm, of the carnage.
The Energy Select Sector SPDR (XLE) declined 3.4%, while the Financial Select Sector SPDR (XLF) fell 2.9%. Shares of JPMorgan Chase & Co. JPM declined 3%. Shares of Wells Fargo & Company WFC lost 1.9%, while Citigroup Inc. C fell 2.2%. Citigroup has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The tech heavy Nasdaq lost 92.99 points, after briefly entering into correction territory at its lows on Thursday.
Rising Bond Yields and Interest Rates Unsettle Markets
October has been a dismal month for stocks in the past. This year too seems to be no different. Growing concerns about rapidly rising interest rates have been making investors jittery since the last week. This sudden rise in long-dated interest rates since the end of September has been one of the major reasons behind investors panicking.
The bond market selloffs saw the 10-year Treasury yield reaching multiyear high earlier this week. The 10-year Treasury yield, however, slid to 3.13% on Thursday. Higher yields raise borrowing costs for both companies and individuals and also divert investments from stocks. This is denting investors’ confident, which saw heavy selloffs once again on Thursday.
Trade War Fears Linger
Trade war fears have been on the rise with United States and China engaging in tit-for-tat tariffs. This has been rattling markets for a while leading o sell offs. The growing trade tensions have made investors worry about a slowdown in global economic growth. However, on Thursday, the Dow bounced back from its session lows on reports that Trump would be meeting Jinping at next month’s G-20 summit, giving hope to investors that a full-blown trade war with China could be averted.
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