Markets Right Now: Indexes slide as energy, tech stocks sink

Markets Right Now: Indexes slide as energy, tech stocks sink

The Dow Jones Industrial Average dropped more than 500 points, with all 11 of the major S&P sectors in the red, led by the energy index's 3.8-per-cent fall. The S&P 500 dropped almost 60 points, or 2.1 percent, and the Nasdaq Composite slid almost 145 points, or 2 percent.

This week's market pullback has come even as USA economic data continues to reflect strong growth. The index's five-day rout reached 3.9 per cent - marking its first pullback of at least that much in a record 404 days.

While interest rates are still low by historical standards, meaning borrowing is still relatively cheap for businesses and people, they've been rising more swiftly, and that's what has markets on edge.

Others have said US stocks were rising mostly on the economic growth that's been seen worldwide in the last two years, which also had sent foreign stocks higher.

The CBOE Volatility Index, the most widely followed gauge measure of stock market volatility, rose to 14.99, after having fallen in the previous two sessions.

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

Canada's main stock index slumped to a four-month low on Friday, with resource and marijuana shares leading broad based declines as higher bond yields pressured global equity markets. Elsewhere, Japan's Nikkei fell 0.9%, as SoftBank retreated and financial shares tumbled after the Bank of Japan offered a special bond purchase to try and contain rising yields.

Volume on US exchanges was 5.39 billion shares, compared to the 7.33 billion average for the full session over the last 20 trading days.

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"It's a legitimate concern, when inflation spikes up a little bit, that people should evaluate how is this going to affect profits and how is this going to affect the Fed", said Jonathan Golub, chief US equity strategist at Credit Suisse.

The question now is whether this market turmoil will persist into next week, or whether investors have been waiting on the sidelines come in to buy after the dip.

Overnight futures accelerated their losses after the Labor Department released its monthly jobs report showing that more jobs were added in January that expected and the wage gain was the biggest in over 8 years.

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.

The numbers were a good sign for workers.

Bond yields rose and contributed to the stock market swoon after the government reported that wages grew last month at the fastest pace in eight years. Banks typically benefit from higher interest rates.

Analysts now see fourth-quarter earnings growth of 13.6 per cent for the S&P 500, up from 12 per cent on January 1. After the data, benchmark 10-year Treasury yields extended their rise to more than 2.8 per cent, as traders boosted bets that the Fed will raise interest rates.

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