[ad_1]
Dow's 30 stocks were all in the red, pushing the index below 26,000 points for the first time in a month. The index fell more than 3%.
Shares are in full collapse in October, collapsing as investors worry about rising interest rates.
October has often been a trying month for investors and this month is up to this reputation. The three indexes are in red this month. But the Nasdaq has really taken on the chin: it has already plunged nearly 8% in October.
The drop in Dow's point was the worst since February, when the index had dropped more than 1,000, twice. The Dow's percentage decline does not shatter the higher percentage declines. The index fell 23% in 1914 and the "black Monday" in 1987.
The SPDR fund in the technology selection sector, representing the information technology sector, plunged 4.85%. This has not happened since August 2011.
Why stocks plunge
While this is largely due to the strength of the US economy, rising 10-year US Treasury yields have prompted investors to question whether the bull market, which is nearly 10 years old, could finally finish.
Higher long-term rates could slow down the hottest sectors of the economy, including technology, as the Federal Reserve appears to want to raise short-term rates in the foreseeable future. Higher rates increase borrowing costs and limit corporate profits.
Investors may want to step out of the pulse and turn to more defensive stocks, cheaper companies that also pay healthy and stable dividends.
Persistent concerns over the slowdown in the Chinese economy – all the more so as trade tensions with the United States have intensified – have also driven the market as a whole.
Who's up and down
But there were few places to hide on Wednesday. Only 17 titles of the S & P 500 ended with a gain. Even utility stocks, which tend to yield big dividends, fell slightly on Wednesday.
Volatility has come back with vengeance. The CBOE Volatility Index, or VIX, a market barometer often dubbed the Wall Street scare indicator, jumped nearly 40%.
What to do when the market turns south
Some experts said that it was not time to panic.
Joe Heider, president of Cirrus Wealth Management, said the withdrawal – especially for technology stocks – was needed.
"The sale is healthy," said Heider. "Since the market reached its lowest level in March 2009, more than 10 years of growth have been the most successful stocks."
Investors "sold first and asked questions later," said John Augustine, chief investment officer at Huntington Private Bank.
And Geoff Alexander, chairman of R. M. Davis, a wealth management company, said he was not too worried about Wednesday's stock market madness.
As long as profits and the US economy continue to grow, this market downturn will eventually be a positive trough, Alexander said. The relative lack of volatility was a bit disturbing. This slide was long overdue.
"We have been scratching the upside in the last 18 months, but we must not worry too much," Alexander said.
Source link
