Published: Sat, February 10, 2018
Markets | By Noel Gibbs

Dow Jones Plunge Has Many Investors Jittery

Dow Jones Plunge Has Many Investors Jittery

The Dow Jones Industrial Average fell by more than 1,000 points for the second time this week, plunging 4.15% to 23,860.

By 12:24 p.m. ET, the Dow Jones Industrial Average was down 499.18 points, or 2.01 per cent, at 24,394.17, the S&P 500 was down 44.5 points, or 1.65 per cent, at 2,637.16. After sinking 567 points early in the day and stumbling into correction territory, the Dow ended the day with a mirror image gain of 567 points.

The losses, which began last Friday, put the benchmark Standard & Poor's 500 index nearly 8 percent below the record high it set two weeks ago.

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

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The S&P 500, the benchmark for many index funds, shed 100.66 points, or 3.8 percent, to 2,581.

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As scary as those developments may sound, a correction-technically, a drop of about 10%-can be considered healthy, or even a buying opportunity for investors who think the market may still have further to run. The Dow dropped from a January 26 peak of 26,567, closing at 23,860 - a plunge of 10.8 percent. The Nasdaq and S&P 500 futures also indicated a positive open.

Investors could be wary of investing in stocks seeing the rise in long-term USA yields as well as a significant surge in stock market volatility.

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The swoon began Friday as investors anxious that accelerating inflation and higher interest rates could derail the market's record-setting rally. The movements seen in US futures come on the back of a sharply lower finish to Thursday's trading.

Few big companies emerged unscathed, with Dow giants Boeing and Caterpillar losing around five percent, around the same range as tech titans Amazon and Facebook. Shares jumped 14 percent.

Expedia (EXP) slumped after its latest earnings fell short of analysts' expectations.

This is a common trend as the need for cash grows during this period - a time when Chinese companies typically pay bonuses and people also traditionally exchange cash and gifts during the period. Furthermore, the 10-year Treasury Yield was up by a total of 2.845% just before the market closes. After falling as low as 9 in 2017, it rose as high as 36 on Thursday. Nasdaq index dropped by 3.9% (275 points), the S&P 500 dropped by 3.8% (101 points), according to Boston Globe.

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Many schemes' funding positions will have suffered from the recent market volatility. If this is repeated for the February figures then the AUD could rise in value.

The three main indexes rose by more than 1 percent on opening.

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