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At midday: TSX, Wall Street continue to fall as sell-off extends globally

11 October 2018

Here are five things to watch ahead of Thursday's US open. Companies that have been the biggest winners on the market the last few years, including technology companies and retailers, suffered steep declines.

At the closing bell, the Dow Jones Industrial Average had lost 3.1 percent or 830 points to finish at 25,613.35, in the biggest fall since February.

Rising bond yields have been drawing investors out of the stock market, and the best-performing stocks over the past year took some of the biggest losses Wednesday.

The Dow Jones industrial average tumbled more than 400 points to just below 26,000 at lows.

The Dow ended down 831 points, or 3.1%, at 25,598.

The rise in U.S. Treasury yields has been bolstered by good U.S. economic data that has reinforced expectations of multiple rate hikes over the next 12 months by the Federal Reserve.

USA stocks are plunging toward their worst loss in six months on Wednesday as technology companies continue to take sharp losses.

In the 1973-74 stock market crash, for instance, the S&P 500 peaked around 700 in December 1972, and then dropped a percentage point or two nearly every month through October 1973, a 15% decline overall.

That all played into a market that is increasingly anxious about global growth after warnings from the International Monetary Fund this week and a rise in Treasury yields to a more than 7-year high above 3 percent that signals a tightening of available capital globally. In 1987, stocks dropped more than 20 percent on a single day-Black Monday, Oct. 19-after a strong rally crashed into the Persian Gulf turmoil and trade deficits.

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Stocks and bonds traditionally have been in a tug of war for capital, but for the past 10 years bonds have had one arm tied behind their back, said Jack Ablin, chief investment officer and founding partner at Cresset Wealth Advisors in Chicago.

Asian markets were broadly lower on Thursday after Wall Street slumped on a heavy selling of technology and internet stocks.

The Nasdaq composite, with a large contingent of tech stocks, tumbled 315.97 points, or 4.1 percent, to 7,422.05.

For stock investors, the recent spike in bond yields may be prompting some uncomfortable deja vu.

USA gold futures settled up $1.9, or 0.16 percent, at $1,193.4. In Asia, Tokyo's Nikkei 225 gave up 3.9 per cent and Hong Kong's Hang Seng index shed 3.5 per cent.

"That suggests the Fed will keep raising rates, and that's taking the wind out of the stocks that have done the most, particularly in the tech sector".

The dollar index fell 0.17 percent, with the euro up 0.25 percent to $1.1518. Jitters about those companies have led to this short-term fall, too, while drops were felt throughout the market.

US crude fell 1.98 per cent to $71.72 per barrel and Brent was last at $81.30, down 2.15 per cent on the day.

The Japanese yen strengthened 0.01 per cent versus the greenback at 112.29.

At midday: TSX, Wall Street continue to fall as sell-off extends globally