Markets Right Now: Stocks fall sharply as bond yields rise

Markets Right Now: Stocks fall sharply as bond yields rise

Those factors came at a time when there was not much newsflow from companies. Chipmaker Nvidia dropped 5 percent.

Global stocks were pummeled on Wednesday amid rising bond yields, renewed tension between China and the United States and concerns that US companies will report compressed profit margins in their upcoming third-quarter financial results. The central bank has increased rates three times this year and eight times since the financial crisis. The rise in rates is weighing particularly heavily on areas of the market that had earlier been the biggest winners. The benchmark index fell for the fifth straight day, which hadn't happened since just before the 2016 presidential election.

Luxury retailers tumbled. Tiffany plunged 9.5 per cent to $111.28 and Ralph Lauren fell 7.3 per cent to $118.42. It's fallen sharply over the past five days.

The Dow Jones Industrial Average fell 109 points, or 0.4%, to 26322 shortly after the opening bell.

Alibaba dropped 4.1 percent after Morgan Stanley and Raymond James cut their near-term profit estimates on the Chinese e-commerce company, citing a softer economic environment in China. The latest slump in the market has, however, shaved off some of the big gains.

Apple gave up 4.6 per cent to US$216.36 and Microsoft dropped 5.4 per cent to US$106.16.

Tech leaders Amazon (AMZN), Facebook (FB) and Netflix (NFLX) were all leading the market lower Wednesday while stodgier companies like food companies Smucker (SJM) and General Mills (GIS), gold miner Newmont (NEM) and bargain retailers Dollar General (DG) and Dollar Tree (DLTR) were trading higher.

Benchmark U.S. crude oil fell 2.4 per cent to $73.17 a barrel in NY.

Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles an hour.

Treasury yields rose again, tempting more investors away from stocks.

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"The impact of increasing bond yields is more about comparative performance".

Tech is taking its lumps because bond yields have climbed in recent weeks, hovering at a more-than-seven-year high.

Declining issues outnumbered advancers for a 3.18-to-1 ratio on the NYSE and a 2.32-to-1 ratio on the Nasdaq.

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.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week.

The weakness in tech was led by semiconductor names after Swiss vacuum valve maker VAT Group said demand from chip equipment makers was softening.

Yesterday, New Zealand shares fell for an eighth day as investors remain uncertain about the global economic outlook.

The S&P 500 index fell 15 points, or 0.6 percent, to 2,864. Within the index, 26 stocks fell, 20 gained and four were unchanged.

S&P 500 e-mini futures EScv1 and Nasdaq futures NQcv1 were both down 0.1 percent.

Shares in the United States energy sectors were hit hard as investors reacted to shutdowns sparked by Hurricane Michael in Florida and the Gulf of Mexico. With a humming USA economy, the Federal Reserve is expected to continue hiking interest rates. Brazil's Bovespa lost 2.5 percent and the Merval in Argentina sank 2.2 percent.

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