Publicado: Jue, Octubre 11, 2018
Financiera | Por Marilu Caballero

S&P tumbles 3 percent as US yields soar, investors shun risk


U.S. stocks tumbled on Wednesday, with the S&P 500 marking its biggest daily decline since February 8, and technology stocks led the losses as rising U.S. Treasury yields sent investors fleeing from risky assets.

New York's Dow Jones Industrial Average fell 3%, or more than 800 points, in Wednesday trading. Nasdaq composite, which has a high concentration of technology stocks, tumbled 244 points, or 3.2 per cent, to 7,495. Earnings season should improve investors' moods through the end of the year, he writes, with a cycle peak in 2020 and the next major low not due until 2020. Berkshire Hathaway dipped 4.1% to $214.64 and reinsurer Everest Re slid 4.6% to $218.97.

Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles an hour.

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. On Tuesday, he reiterated his criticism of the Federal Reserve for raising interest rates, saying that he does not want current economic growth to slow down "even a little bit". But eventually the high rates worry stock investors, as higher rates tend to increase borrowing costs and cut into profit margins. Yields on 3-year notes have recently traded just above 3.0 percent, providing long-absent competition for investment returns with equities.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy.

Meanwhile struggling retailer Sears was in focus as the Wall Street Journal reported that it was preparing to file for bankruptcy.

Trade-sensitive industrial stocks also fell as tensions between Washington and Beijing persisted. It was more than $40 five years ago.

The yield on the 10-year Treasury is 3.20%, the highest level in seven years.

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The S&P 500 index sank 94.66 points, or 3.3 percent, to 2,785.68.

The CBOE Volatility Index, Wall Street's "fear gauge", rose 2.5 points, gaining for the fifth straight session to hit its highest since June 25. Over the years, Sears has closed hundreds of stores and sold several famous brands.

Benchmark US crude oil fell 2.4 per cent to US$73.17 a barrel in NY. Silver dipped 0.5 percent to $14.33 an ounce. As bond yields rise, risk-averse investors-ranging from the proverbial cautious retiree to very big pension funds-become more willing to park more money in bonds and collect the interest.

Benchmark U.S. crude oil fell 2.4 per cent to $73.17 a barrel in NY.

The S&P 500 fell 39 points, or 1.4 percent, to 2,840.

Shares in upscale jewellery retailer Tiffany & Co and perfume maker Estee Lauder both fell 7 percent after a warning from French luxury goods firm LVMH about softening demand in China. The euro rose to $1.511 from $1.1496 late Tuesday, and the British pound rose to $1.3175 from $1.3146.

The Japanese yen strengthened 0.53 percent versus the greenback at 112.36.

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