Stock prices plummet amid tech selloff, rising interest rates

USA stock exchanges recorded biggest losses in 8 months as rising interest rates made investors flee risky stocks.

Investors may want to shift out of momentum and into more defensive stocks - companies that aren't as expensive and also pay healthy, stable dividends.

At the same time, the burgeoning trade war between the United States and China has been creating uncertainty on corporate earnings.

"Both companies highlighted rising costs, not only input costs but increasing operating expenses [and] marketing expenses", she said. It was at just 3.05 percent early last week.

The Standard & Poor's 500 index fell 94 points, or 3.3%, to 2,785 on Wednesday, its biggest one-day loss since February 8. The benchmark US stock index hadn't suffered a five-day losing streak since November 2016, just before the presidential election. It's fallen 7.5 per cent in just five days. The Russell 2000 index of smaller-company stocks shed 46.45 points, or 2.9 per cent, to 1,575.41.

The market had enjoyed a stretch of relative calm, where even big intraday losses were erased by the end of the day. But over the past five days, the losses stuck, and on Wednesday the selling went on right to the closing bell.

Apple gave up 4.6 per cent to US$216.36 and Microsoft dropped 5.4 per cent to US$106.16. In 1987, stocks dropped more than 20 percent on a single day-Black Monday, Oct. 19-after a strong rally crashed into the Persian Gulf turmoil and trade deficits. Berkshire Hathaway dipped 4.1 percent to $214.64 and reinsurer Everest Re slid 4.6 percent to $218.97.

Luxury retailers tumbled after LVMH, the parent of Louis Vuitton, said its sales growth in China slowed.

Bond prices fell. The yield on the 10-year Treasury rose to 3.23 percent.

The yield on the 10-year Treasury rose to 3.23 percent, the highest level in seven years.

Oil prices fell more than 2 percent as U.S. stocks plunged, even though energy traders anxious about shrinking supply from Iran due to U.S. sanctions and kept an eye on Hurricane Michael, which closed almost 40 percent of U.S. Gulf of Mexico output.

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For example, a yield rise in a month of one standard deviation or less, which would be 20 basis points now, is manageable for stocks, Goldman said in a note last week.

The losses were widespread as bond yields remained high after steep increases last week.

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.

"The S&P 500 is looking very weak and negative and that is putting fear into investors", said Michael Matousek, head trader at U.S. Global Investors.

Sears Holdings plunged 32 percent after the Wall Street Journal said the debt-laden retailer was preparing for a possible bankruptcy. Within the index, 26 stocks fell, 20 gained and four were unchanged. And if history is any guide, we won't have to endure too much, as the S&P has been up an average of 14.5% a year after all midterm elections going back to 1946, while all 18 midterms saw higher returns 12 months later, he notes. Over the years, Sears has closed hundreds of stores and sold several famous brands. The Nasdaq fell 177 points, or 2.3 percent, to 7,560. Natural gas rose 0.6 percent to $3.28 per 1,000 cubic feet.

Gold rose 0.2 percent to $1,193.40 an ounce.

CVS dipped 0.1 percent to $79.40 and Aetna added 0.5 percent to $204.64.

The CAC 40 in France dropped 2.1 percent, Germany's DAX lost 2.2 percent and the FTSE 100 in London fell 1.3 percent.

Stock in all 30 blue-chip index companies fell, with Boeing and Caterpillar dropping at least 3.8 per cent.

"The market is starting to believe the Federal Reserve a bit more and starting to price [rate hikes] in", Mona Mahajan, US investment strategist at Allianz Global Investors, told The Post. Brazil's Bovespa lost 2.5 per cent and the Merval in Argentina sank 2.2 per cent.

The Japanese yen strengthened 0.53 percent versus the greenback at 112.36.

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