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Dow sees sharpest drop since June 2016 | Dow sees sharpest drop since June 2016 |
(35 minutes later) | |
The blue chip Dow Jones Industrial Average suffered its steepest decline since June 2016 on Friday, amid wider losses in US markets. | The blue chip Dow Jones Industrial Average suffered its steepest decline since June 2016 on Friday, amid wider losses in US markets. |
The fall came after a string of disappointing earnings reports from giants such as Apple. | The fall came after a string of disappointing earnings reports from giants such as Apple. |
Strong wage growth in the latest payrolls data also spooked investors raising the possibility of higher interest rates than expected. | Strong wage growth in the latest payrolls data also spooked investors raising the possibility of higher interest rates than expected. |
The Dow fell more than 665 points or 2.5% to 25,520.96. | The Dow fell more than 665 points or 2.5% to 25,520.96. |
The S&P 500 tumbled 59.8 points, falling 2.12% to 2,762.13, while the Nasdaq closed 144.91 points lower at 7,240.9, down 1.96%. | The S&P 500 tumbled 59.8 points, falling 2.12% to 2,762.13, while the Nasdaq closed 144.91 points lower at 7,240.9, down 1.96%. |
The losses touched every sector, with the steepest declines in energy and technology stocks. | The losses touched every sector, with the steepest declines in energy and technology stocks. |
Chevron and Exxon were the two biggest losers on the Dow, falling more than 5%. Apple was number four, retreating 4.3%. | Chevron and Exxon were the two biggest losers on the Dow, falling more than 5%. Apple was number four, retreating 4.3%. |
The yield on the 10-year Treasury note hit a four-year high on Friday, extending increases that have come as central banks globally ease stimulus programmes and raise rates. | The yield on the 10-year Treasury note hit a four-year high on Friday, extending increases that have come as central banks globally ease stimulus programmes and raise rates. |
The gains in bond yields have touched off fears in the stock market that higher borrowing costs could hurt consumers, while making stocks a less attractive investment. | |
There are also geopolitical questions that could be rattling markets, including trade tensions with major US partners that include China. | There are also geopolitical questions that could be rattling markets, including trade tensions with major US partners that include China. |
"There are still a number of question marks on the side of fiscal policy," said Lindsey Piezga, chief economist at Stifel Fixed Income. | "There are still a number of question marks on the side of fiscal policy," said Lindsey Piezga, chief economist at Stifel Fixed Income. |
Analysts cautioned against reading too much into the market declines, which follow a massive rally in 2017 that was fuelled by a strengthening global economy and high expectations for US corporate tax cuts. | Analysts cautioned against reading too much into the market declines, which follow a massive rally in 2017 that was fuelled by a strengthening global economy and high expectations for US corporate tax cuts. |
The three major stocks indexes also closed January up more than 5%. | The three major stocks indexes also closed January up more than 5%. |
The Dow, which tracks about 30 major companies, in particular is not a good gauge, said Brian Barnier, head of analytics at Valuebridge Advisers. | The Dow, which tracks about 30 major companies, in particular is not a good gauge, said Brian Barnier, head of analytics at Valuebridge Advisers. |
"It's very important to separate trading activity from real investing activity," he said. | "It's very important to separate trading activity from real investing activity," he said. |
Assuming they have well-designed portfolios, "mom and pops sitting at home... should not be concerned, given the massive run up in the market," he added. | Assuming they have well-designed portfolios, "mom and pops sitting at home... should not be concerned, given the massive run up in the market," he added. |