Markets

Dow plummets almost 700, capping worst week in 2 years

Dow plummets almost 700, capping worst week in 2 years

"Armenpress" reports the value of Dow Jones down by 2.54% to 25520.96 points, S&P 500 down by 2.12% to 2762.13 points, Nasdaq down by 1.96% to 7240.95 points.

Investors are afraid that the recent rise in USA wages means inflation is on the way. The indexs five-day rout reached 3.9 percent - marking its first pullback of at least that much in a record 404 days.

Assuming they have well-designed portfolios, "mom and pops sitting at home. should not be concerned, given the massive run up in the market", he added.

Apple fell 4.3 per cent after reporting a record $20 billion profit in the fourth quarter on higher revenues.

The stock market closed sharply lower, extending a weeklong slide, as the Dow Jones industrial average plunged more than 600 points.

The Dow lost 665.75 points, or 2.5 per cent, to 25,520.96.

The selloff in US assets picked up steam as strong jobs data increased the likelihood the Federal Reserve will lift rates next month.

"Optimism has fled the stock markets", according to a note by analysts from the bank, Desjardins.

Analysts have been eyeing a recent increase in USA bond yields that accelerated further on Friday following the jobs data.

Other market analysts think Friday's drop has little to do with Washington.

More recently, the market had been surging in the so-called 'Trump rally'. Some investors saw a potential buying opportunity. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017. "Asset prices and the economy have become addicted to low rates", said Peter Boockvar, chief investment officer at the Bleakley Financial Group.

The down day came after the government reported that US job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment. European bond yields also rose after the U.S.jobs report came out.

The decline sent the Dow below the psychologically important level of 26,000, which it had just broken through for the first time two-and-a-half weeks ago. That, in turn, has fanned fears that the Federal Reserve will hike interest rates to keep pace with inflation.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. But they anxious investors, who are concerned that the combination of higher wages, a tighter labor market and an uptick in inflation may push the Federal Reserve to raise its benchmark interest rate at its next meeting in March.

Selling in U.S. Treasurys surged after the report, pushing yields to multi-year highs; the benchmark 10-year yield jumped 8 bps - extending its weekly gain to 19 bps - to finish at 2.85%, the highest level since January 2014; shorter-dated issues showed relative strength, with the two-year yield losing 2 bps to 2.14%.