The Dow Jones Industrial Average traded 104 points lower, bringing its two-day losses to more than 900 points. The S&P 500 dropped 0.5 percent and was on pace for a six-day losing streak. The broad index also broke below its 200-day moving average for the first time since May. The Nasdaq Composite rose 0.1 percent.
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The major indexes pared losses in late-morning trading as tech shares rebounded from their worst day in seven years. Facebook rose more than 1 percent while Alphabet gained 0.8 percent. Apple, meanwhile, gained 0.2 percent.
Tech shares fell more than 4.5 percent on Wednesday, marking their worst day since 2011. The sell-off led to the Dow sinking more than 800 points and the S&P 500 dropping more than 3 percent. It was also the 28th time since 2011 the S&P 500 posted a more than 2 percent decline, according to data from Birinyi Associates.
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“It’s a momentum correction, not a portfolio correction,” said Joe Terranova, chief market strategist at Virtus Investment Partners. “While we have a bias to believe 2008 could happen again, I don’t think this is the case.”
“Less is more in this environment,” Terranova added. “I think you need to be an observer of the guidance you get in earnings.”
Weaker-than-expected inflation data also helped stocks pare losses. The U.S. government said the consumer price index rose 0.1 percent in September, well below the expected gain of 0.2 percent.
These data pushed Treasury yields fell from multiyear highs. The 10-year Treasury note yield traded at 3.157 percent while the two-year yield slipped to 2.848 percent.
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“Net, net, the economy may be running hot, but it isn’t fast enough to kick up inflation pressures and calls into question the need for Fed policymakers to move interest rates to higher levels,” Chris Rupkey, chief financial economist at MUFG Union Bank, said in a note.
Rising U.S. Treasury yields had been keeping investors on their toes in previous sessions amid stoked fears that rising borrowing costs could slow down the economy. It also added concerns over what the future of U.S. monetary policy. The Federal Reserve has hiked rates three times this year and is largely expected to raise rates once more before year-end.
President Donald Trump has been critical of the Fed’s tightening course recently. On Wednesday, he said the Fed was “making a mistake” by raising rates. In a telephone interview with Fox News later that day, he said he wasn’t happy with the Fed, and that it was “going loco” and there was no reason for them to continue to raise rates at the pace they were doing.
International Monetary Fund managing director Christine Lagarde refuted Trump’s claims, saying that she “would not associate” Fed Chair Jerome Powell “with craziness.”
The Cboe Volatility index (VIX), widely considered as the best gauge of fear in the market, rose to its highest level since March 28 on Thursday, before easing slightly.
“As markets slide further and investors seek other safe havens like options for protection, we could see higher VIX levels moving forward,” said Jeff Chang, managing director at Cboe Vest.
Source: cnbc.com | Original Link