The Dow Jones industrial average tumbled almost 666 points Friday in the biggest plunge since June 2016, as the worsening bond rout stirred angst that the Federal Reserve will accelerate its rate-increase schedule.
"With interest rates on hold for the time being and inflation and wages beginning to show signs of picking up, the United States could be on course to hit the White House's economic growth target of 3% this year", suggested Jacob Deppe, head of trading at online trading platform, Infinox.
The Dow alone slumped more than 650 points, or 2.5 percent to 25,520.96.
"It's not time to panic", Warne says, noting that the broad Standard & Poor's 500 stock index is down just 3.9% from its January 26 record high.
Stocks have not had a pullback of 10 percent or more in two years and hit their latest record highs just one week ago. Its weekly rout hit 3.7 percent, most since February 2006.
Investors rushed toward the exits yesterday, as the Dow Jones Industrial Average fell by a whopping 665 points.
Weak earnings from several giant US companies including Exxon Mobil and Alphabet, Google's parent company, further dented investors' confidence. The German DAX index lost 4.2 percent over the week, and South Korea's Kospi index lost 1.9 percent. The e-commerce giant rose 2.9 percent after its fourth-quarter profit increased by more than $1 billion. Brent crude, used to price worldwide oils, fell 91 cents, or 1.3 percent, to $68.74 per barrel in London.
The yield on the 10-year Treasury note, a benchmark for many kinds of loans, including mortgages, climbed to 2.85 percent Friday, the highest level in roughly four years.
Stocks fell sharply in midday trading, putting the market on track for its worst week in two years.
Tech stocks (-3%) also tumbled, as Apple, Alphabet and Visa fell between 3.8% and 5.3% after releasing their Q4 results. Combined estimates for 2018 profits among companies in the index have gone from $145.90 a share on December 15 to $156.20 on Friday, a rate of increase that is four times faster than any stretch since at least 2012, data compiled by Bloomberg show. The Dow finished up 5.8 percent to start the year.
The pan-European FTSEurofirst 300 index of leading regional shares closed down 1.37 percent and the blue-chip FTSE 100 index in London closed down 0.63 percent. That was the worst point drop since the blue-chip average fell 678.92 points on October 9, 2008, in the midst of the nation's financial crisis.
The gain in bond yields, which come as central banks globally ease stimulus programmes and raise rates, have touched off fears that stocks could become a less attractive investment, while signalling higher borrowing costs that could crimp consumer activity.
In the broad market, energy, technology and utilities led losses.