Mario Tama/Getty Images
- Stocks fell on Wednesday as Wall Street sweat over global growth prospects and a bond sell-off.
- The two-year yield hit its highest level since 2008.
- Trade-sensitive industrial stocks also fell amid tensions between Washington and Beijing.
Stocks took a beating on Wednesday as concerns about global economic growth and ongoing trade tensions continued to hang over Wall Street and after the bond market resumed a sell-off that started last week.
Technology companies were among the biggest losers, with the Nasdaq composite plunging more than 4%. In its steepest decline since February, the Dow Jones industrial average dropped more than 800 points, to 25,626.51. The S&P 500 fell for a fifth straight session, down more than 2.5%, to below its 50-day moving average.
Investors sold off US government bonds, with the two-year yield touching its highest point since June 2008. The Federal Reserve is expected to continue tightening after increasing rates three times this year and eight times since the financial crisis.
On Tuesday, the International Monetary Fund downgraded its outlook for the world economy. Citing concerns about trade and emerging markets, the international lender lowered its global growth forecast for this year and next in a report.
An ongoing conflict between Washington and Beijing weighed on large-cap industrial stocks, including Boeing (-4.58%) and Caterpillar (-3.84%). When asked by a reporter Tuesday whether he was ready to place additional tariffs on Chinese goods, President Donald Trump replied, "Sure, absolutely."
A closely watched inflation measure in the US rose for the first time since June, according to the Labor Department. Partly driven by a jump in transportation costs, the producer price index rose by a seasonally adjusted 0.2% in September from a month earlier. The rebound was in line with expectations.
Following reports that Sears could file for bankruptcy protection as soon as this week, shares of the cash-strapped retailer plummeted nearly 15%.
On the commodities front, oil prices fell as supply concerns took a back seat to warnings of dampened global growth. Bloomberg reported that Hurricane Michael, which made landfall in Florida on Wednesday as one of the worst US hurricanes on record, had veered east of oil and gas platforms. West Texas Intermediate was trading down more than 2%, at about $73 per barrel.
US markets mirrored risk-off sentiment around the globe, with European stocks also ending sharply lower. Italy's ruling coalition has been clashing with European Union officials over its budget, saying on Wednesday that it wouldn't "backtrack" on plans to increase deficit spending.
Here's a look at the upcoming economic calendar:
- Monthly inflation numbers are out in the US.
- Earnings season kicks off with reports from JPMorgan Chase, Citigroup, and Wells Fargo.
- The International Monetary Fund and the World Bank hold an annual gathering in Indonesia.
- Spiking bond yields have become a nightmare for stocks — and Bank of America has found the threshold where traders should dump equities altogether
- Brazil's unpredictable presidential election is 'on a knife edge' — here's what it could mean for markets
- Global bond yields just spiked to multiyear highs — and it's fueling everyone's biggest fear about markets