Wall Street opens higher; Dow rises over 200 points

Wall Street opens higher; Dow rises over 200 points

Wall Street opens higher; Dow rises over 200 points

The S&P 500, the index that investors pay the most attention to, is in a correction, down 10.2 percent from its recent high. And it's now in a correction - 10% off its record high just two weeks ago.

The Dow lost 1,032.89 points, or 4.1 percent, to 23,860.46. He said the loss represented a 4.5 percent decline in the market. Those include worries about a potential rise in US inflation or interest rates and budget deficits in Washington.

"The market has undergone a psychological change", says Doug Ramsey, chief investment officer at The Leuthold Group in Minneapolis. The bond market is a decent indicator of fears about inflation. We haven't had inflation, and now we have it and everyone freaks out. The Dow fell sharply on Friday and Monday, erasing the market's gains for 2018.

US equities extended their losses in a week overtaken by wild swings in the stock market. Natural gas rose 1 cent to $2.76 per 1,000 cubic feet.

"This increased volatility had been one that the market was anticipating at the start of the year, but certainly took its time to arrive and may retain a spot in the market after this week's tumultuous turn". The market briefly recovered earlier in the week before falling again Thursday.

"A big down day like Monday doesn't just go away". Bond yields are rising as the Federal Reserve trims its USA bond holdings. That combination usually carries stocks higher.

"We had an epic run".

Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, said the plunge wasn't caused by inflation fears alone.

Bond yields in the USA have also risen in recent weeks, typically a signal of higher rates.

Alexandra Coupe, associate director investment manager PAAMCO, said rising inflation makes stocks less attractive. "Obviously people are reacting".

The bull market has feasted on extremely low bond rates for years, but those days may be ending.

New York Federal Reserve President Bill Dudley told Bloomberg News on Thursday that if the US economy keeps getting stronger the central bank may be justified in raising rates four times this year. The first of those rate hikes is expected in March.

Washington is putting more pressure on rates.

The Committee for a Responsible Federal Budget warns it would "set the stage for more than $1.5 trillion of new debt over the next decade". The recent tax bill has forced the Treasury to borrow more money, which will put more bonds into play. To drum up demand for that higher supply, rates may have to go up.

Bank of America analysts warned that the Senate agreement will contribute to "higher rates" and raise "risks for tighter overall financial conditions".

The S&P 500 remains up 26 percent since Trump's election, and on Tuesday clawed back into positive territory for 2018, up 0.8 percent.

After two hours trading, the main indices are all up, as investors hold their nerve.

The development is likely to be particularly unwelcome at the White House, where President Donald Trump has made much of stock-market gains under his presidency. American Express and Intel were the two biggest losers on the Dow.

The Standard & Poor's 500 stock market, a broader market gauge that is a core holding in 401 (k) plans, also fell into correction terrritory.

Fresh economic figures on Thursday showed that the number of Americans filing for unemployment benefits hit a 45-year low - a sign that the U.S. economy is storming ahead but is also at risk of over-heating.

"The U.S. economy is on solid foundation", said ClearBridge's Schulze.

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