Dow Jones sinks as bond yields rise

Tech stocks in the S&P 500 fell 2.5 percent Wednesday for the steepest loss among the 11 sectors that make up the index.

In the background, long-term interest rates for US Treasury bonds have surged to their highest levels since 2011, leading to a dramatic fall in risk appetite for the stock market.

The tech sector was hit hardest, with Netflix down almost 7 per cent, Amazon down 5 per cent and Apple, Google and Facebook all down more than 3 per cent.

The 10-year Treasury yield rose to 3.23 percent from 3.20 percent late Tuesday and from 3.05 percent early last week.

But historically, a monthly move of one to two deviations, or 20 to 40 basis points now, would result in flat S&P 500 returns.

The Dow fell 831 points, or 3.1 percent, to 25,598. The Nasdaq composite dropped 173, or 2.2 percent, to 7,565.

There have recently been several indications that the US housing market has cooled, likely in part due to higher rates on mortgages.

Gina Martin Adams, chief equity strategist for Bloomberg Intelligence, said the stocks have become more volatile in the last few months because investors have concerns about their future profitability.

In addition, Fundstrat's Robert Sluymer argues that in the near term, stocks look oversold and "due for a rebound", as the S&P tests its first support at its 50-day moving average, and the Nasdaq, at its 100-day moving average.

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USA long-dated Treasury yields rose again in extension of a trend over the last few weeks fueled by solid US economic data that reinforced expectations of multiple interest rate hikes over the next 12 months.

Sears has closed hundreds of stores and sold several famous brands or put them on the block as it sees more customers abandon its stores.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices.

MARKETS ABROAD: Japan's Nikkei 225 added 0.2 percent, South Korea's Kospi dropped 1.1 percent and the Hang Seng in Hong Kong gained 0.1 percent. Heating oil fell 1.2 percent to $2.39 a gallon. United States gold futures settled up $1.9, or 0.16 percent, at $1,193.4.

'As stocks go up, tech goes up more than the stock market.

The S&P 500 index fell 15 points, or 0.6 percent, to 2,864. All this means that bonds, backed by the USA government, have become more attractive and thus many investors are turning to them as a risk-free investment.

It followed a bleak session in Europe, where Germany's Dax and France's Cac 40 had each ended the day more than 2% lower.

The turmoil came a day after the International Monetary Fund slashed its global growth forecast on worries about trade wars and weakness in emerging markets. Brazil's Bovespa lost 2.5 per cent and the Merval in Argentina sank 2.2 per cent. The euro rose to $1.511 from $1.1496 late Tuesday, and the British pound rose to $1.3175 from $1.3146.

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