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Wall Street tumbles to correction territory | |
(about 3 hours later) | |
Wall Street shares slid sharply again on Thursday, thrusting the Dow Jones Industrial Average and S&P 500 into correction territory. | |
The Dow Jones Industrial Average fell by more than 1,000 points for the second time this week, plunging 4.15% plunge to 23,860. | |
The S&P 500 dropped 100.58 points or 3.75% to 2,581, while the Nasdaq slid 274.8 points or 3.9% to 6,777.1. | |
The moves follow a day of losses on all key European exchanges. | |
The 100 share index in London closed down 1.49% at 7,170.69 points. Germany and France fell 2.6% and 2% respectively. | |
Fears that a stronger global economy will push inflation and interest rates higher are again driving the falls. | Fears that a stronger global economy will push inflation and interest rates higher are again driving the falls. |
The Bank of England's latest policy meeting left interest rates where they were at 0.5% but said a strengthening economy meant interest rates were likely to rise sooner than the markets were expecting. | The Bank of England's latest policy meeting left interest rates where they were at 0.5% but said a strengthening economy meant interest rates were likely to rise sooner than the markets were expecting. |
Weekly jobless figures out in the US on Thursday showed claims for unemployment relief fell to their lowest level in nearly 45 years. | Weekly jobless figures out in the US on Thursday showed claims for unemployment relief fell to their lowest level in nearly 45 years. |
Thursday's sessions saw a return to the steep falls sparked around the world by positive news on employment and wages in the US at the end of last week. | Thursday's sessions saw a return to the steep falls sparked around the world by positive news on employment and wages in the US at the end of last week. |
The declines have led to questions for President Donald Trump, who had repeatedly boasted of the market's rapid rise in value last year. | |
"The president like the rest of the White House is concerned about long term economic indicators and factors," a White House spokesman said. | |
"The fundamentals in terms of the long term are very strong." | |
Higher employment in theory means employers have to pay more to attract and retain the workers they want. | Higher employment in theory means employers have to pay more to attract and retain the workers they want. |
Higher wages can allow higher inflation, which then requires higher interest rates to contain it. | Higher wages can allow higher inflation, which then requires higher interest rates to contain it. |
Most central banks have targets for inflation within which they are supposed to keep it contained. | Most central banks have targets for inflation within which they are supposed to keep it contained. |
Higher interest rates push up borrowing costs for companies and individuals. | Higher interest rates push up borrowing costs for companies and individuals. |
Analysts have said for months that the financial markets were due a correction after a long period of rising prices. | Analysts have said for months that the financial markets were due a correction after a long period of rising prices. |