Wall Street dives, setting the ASX up for heavy losses at open

  • Wall Street dives, setting the ASX up for heavy losses at open

Wall Street dives, setting the ASX up for heavy losses at open

The CBOE Volatility Index, or VIX, a market barometer often dubbed Wall Street's fear gauge, surged more than 25%.

As a five-day market slump raises concerns that the record bull market may be ending, press secretary Sarah Sanders says, "The fundamentals and future of the USA economy remain incredibly strong".

Wednesday marked the largest single-day decline in the Dow Jones since February 8, when it fell 1,032 points to close at 23,860.

Sanders highlighted strong economic indicators, including low unemployment and rising wages, saying President Donald Trump's policies "have created a solid base for continued growth".

At the closing bell in the New York Stock Exchange on Wednesday, the Dow Jones Industrial Average had lost 3.1 percent or 830 points to finish at 25,613.35, in the biggest fall in eight months.

Tech stocks declined due to rising bond yields, which followed a spike in rates for the benchmark U.S. 10-Year Treasury. Among the so-called FAANG stocks, Facebook Inc. fell 1.3 per cent, Amazon.com Inc. fell 3.6 per cent, Apple Inc. fell 2 per cent, Netflix Inc.

That all played into a market that is increasingly anxious about global growth after warnings from the International Monetary Fund this week and a rise in Treasury yields to a more than 7-year high above 3 percent that signals a tightening of available capital globally.

The S&P 500 fell nearly 92 points, or just over 3 percent, the biggest daily loss since February this year. It was at just 3.05 per cent early last week and 2.82 per cent in late August. Technology companies were among the losers, with the Nasdaq Composite dropping more than 2% to 7,575.34. And right now tech stocks-like the trillion-dollar Apple-have dominated a significant part of the rise in value of the market as a whole.

The Philadelphia Semiconductor index sank 2.19 per cent, with Intel down 1.7 per cent. Nvidia, down 4.2 per cent, and AMD, down 5.7 per cent, were also hit by Huawei's plan to make chips for servers. On Wednesday, the 10-year yield once again touched its highest level in seven years.

S&P 500 e-mini futures EScv1 and Nasdaq futures NQcv1 were both down 0.1 percent. Amazon skidded 6.2 per cent to US$1755.25.

Global stocks were pummeled on Wednesday amid rising bond yields, renewed tension between China and the United States and concerns that USA companies will report compressed profit margins in their upcoming third-quarter financial results. That's helped make technology stocks more volatile in the past few months.

All of these stocks have seen sharp gains on the year and yet investors have been quick to sell-off and take profits as they shift into more conservative securities like bonds and treasury notes.

Sears Holdings plunged 32 percent after the Wall Street Journal said the debt-laden retailer was preparing for a possible bankruptcy.

The S&P 500 fell 39 points, or 1.4 percent, to 2,840.

The Dow Jones Industrial Average lost 342 points, or 1.3 percent, to 26,090.

As well, analysts expect companies in the S&P 500 will report profit growth of more than 20 per cent, year-over-year, driven partly by tax cuts and strong economic growth.

Microsoft lost 1.4 percent in early trading Wednesday and 3M gave up 1.6 percent.

The S&P/NZX 50 index declined 19.16 points, or 0.2 per cent, to 9050.82. The Nasdaq composite fell 73 points, or 1 percent, to 7,663.