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The sale of US equities accelerated on Wednesday (October 24), briefly wiping out the year's gains for the S & P 500 index, as mixed business results and weak housing data fueled the pace. concern that rising prices will dampen economic growth. Treasury securities rallied for a second day on demand for safe haven assets.
The S & P has extended its October rout to 8.1%, making it the worst month since May 2010. The Dow Jones Industrial Average has also turned negative. The disappointing earnings of AT & T and Texas Instruments led to lower sales in the communications and semiconductor groups, offsetting Boeing's promising prospects.
The Dow dropped more than 400 points and the Nasdaq Composite Index flirted with a correction in its record, closing its record in August. The sale of US securities has gained momentum, mixed corporate profits and weak housing data have fueled concerns that rising prices are holding back economic growth. Treasury securities rallied for a second day on demand for safe haven assets.
Amidst the flood of profits that will drive Microsoft's reports later Wednesday and Alphabet, Intel and Amazon.com on Thursday, economic data continues to under-feed, particularly on the front of rate-sensitive housing. Sales of new homes fell again, leading to a decline in the number of battered home builders.
The fragile market sentiment is also based on reports that potential bombs have been sent to two former US presidents and CNN headquarters in New York.
"We've just come to realize what can go wrong," said Kate Warne, investment strategist at Edward D. Jones & Co., during an interview at Bloomberg's New York headquarters. "So we will have more days when the actions will move a lot during the day, while everyone will try to understand what the reports of today mean."
European politics were also at the center of the agenda, with Italian Prime Minister Giuseppe Conte doubling his government's budget and the government of British Prime Minister Theresa May falling into conflict. The pound weakened and bonds in the region rallied. The euro fell after disappointing manufacturing data. A downturn in the Chinese markets helped the MSCI Asia Pacific Index avoid a bear market, even though it fell slightly.
"At the moment, markets are still trying to replenish," said Chris Zaccarelli, investment director at the Independent Advisor Alliance. "What happens with profits exaggerates market movements."
Elsewhere, oil has changed little after reaching its lowest level in nearly two months on Saudi Arabia's commitment to deal with any deficit resulting from sanctions imposed by Iran. Emerging market currencies and equities were generally weaker.
– Vildana Hajric, Sarah Ponczek (c) 2018, Bloomberg
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