Wall Street was hammered on Wednesday as investors dumped high-growth names such as technology and FAANG stocks, with rising Treasury yields and trade-related worries sapping their risk appetite. Amazon and Alphabet, respectively the second- and fourth-most valuable USA companies, are in what's known as a "correction", a drop of more than 10 percent from a recent peak.
Japan's benchmark fell by an unusually wide margin of 3.9 percent and China's main index lost 4.3 percent.
JPMorgan 's Jason Hunter thinks we may have seen the worst of the news from the bond market, as recent action leaves him "looking for yields to form a bullish reversal pattern near current levels and define the cheaper end of the fourth-quarter 2018 to first-quarter 2019 range". Yields on 3-year notes have recently traded just above 3.0 percent, providing long-absent competition for investment returns with equities.
At 12:44 p.m., the Nikkei 225 average traded at 22,496.24, down 1,009.80 points, or 4.30 percent, from Wednesday's closing. The FAANGs, spread over three sectors, were down between 1.4 percent and 5.4 percent. Stocks plunged in Taiwan and fell across Southeast Asia.
It followed a bleak session in Europe, where Germany's Dax and France's Cac 40 had each ended the day more than 2% lower. "The valuation of USA stocks, especially tech stocks, is still pretty high and there could be some profit taking actions now", Tan explained. The price of gold jumped 2.9 percent to $1,227.60 an ounce. The S&P 600 closed at 987.79 for a loss of -28.15 points or -2.77%. Intel dipped 3.76 percent today but that might be viewed lightly when you look at team Red and team Green's day on the market.
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USA stocks notched solid gains in the third quarter as investors brushed aside worries about trade wars and focused on strong corporate earnings and solid U.S. economic data.
Highly performing companies are often hit the hardest when fears rise over rapidly increasing interest rates and the S&P Information Technology Index (INDEXSP:SP500-45) is comprised of some of the world's most valuable technology stocks such as Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL), and Facebook (NASDAQ:FB). Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks.
Tech stocks, hit hard Wednesday, crept back into positive territory Thursday morning.
In health care, CVS sank 7.2 percent to $73.25 and Aetna sagged 2 percent to $199.37 after the New York Post said New York state regulators have concerns about CVS' purchase of the health insurer.
Wholesale gasoline lost 4.3 percent to $1.93 a gallon.
The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday. The British pound rose to $1.3197 from $1.3146.