US stocks plunged in highly volatile trading on Monday, with both the S&P 500 and Dow Industrials indices slumping more than 4.0 percent, as the Dow notched its biggest intraday decline in history with a almost 1,600-point drop and Wall Street erased its gains for the year.
The Dow Jones Industrial Average fell 132.73 points, or 0.56 percent, to 23,727.73, the S&P 500 lost 6.69 points, or 0.26 percent, to 2,574.31 and the Nasdaq Composite dropped 18.53 points, or 0.27 percent, to 6,758.63.
The 10-year Treasury yield, which touched a four-year high of 2.88% on Thursday, is trading around 2.81% on Friday.
As big as the Dow's drop seems to be, it has only taken the Dow back down to levels that it first hit in November.
The sharp selloff in recent days was kicked off by concerns over rising inflation and bond yields, sparked by last week's January U.S.jobs report.
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We have built up allocations to alternative strategies, which aim to be uncorrelated to the direction of equity and bond markets, and may be partially sheltered from an equity market shakeout such as we are now witnessing. Other markets lost ground, with the Hong Kong Hang Seng index down 3.1 per cent and Japan's Nikkei 225 index recording a loss of 2.3 per cent. India's Sensex retreated 1.1 percent to 34,017.83 and benchmarks in New Zealand, Taiwan and Southeast Asia also fell. All 30 of the blue-chip Dow industrial components finished negative.
The Dow lost 1,330.06 points, or 5.2 percent.
Major U.S. indexes set their latest record highs just two weeks ago.
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The Dow Jones Industrial Average sank another 600 points on Thursday as a renewed rise in USA bond yields and fears of higher inflation unnerved investors still poring over a historic drop earlier this week. The rout erased $2.5 trillion in value from the S&P 500 and $5.2 trillion from global stocks, according to S&P Dow Jones Indexes. The ASX 200 was on track for its worst week since January 2016. Other European markets posted steeper declines, with the German Dax and French Cac down 1.67 per cent and 1.51 per cent.
Trader Robert Charmak, left, works on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018.
On Wall Street, many companies that rose the most over the previous year have borne the brunt of the selling.
The market has been particularly unpredictable over the last week, suffering a record loss of 1,179 points on 6 February before bouncing back over the next few days.
The swoon began Friday as investors anxious that accelerating inflation and higher interest rates could derail the market's record-setting rally. Once losses surpass 20% from the market's most recent high, it's considered to be a bear market. While many businesses attribute their beefed up compensation to the tax law changes, larger employers also are having a hard time attracting and keeping workers because of historically low unemployment rates. "There's kind of an emotional reversal that's going on".
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Jim Bianco, head of the Chicago-based advisory firm Bianco Research said: "What's happened here is an understanding that inflation is returning and that the central bank quantitative easing that we've grown accustomed to is coming to an end".
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