The biggest drop in the Dow Jones was ExxonMobil, which went down more than 6%. The stock market finally got spooked by an ongoing sell-off in bonds.
Canada’s Finance Minister Bill Morneau backed that sentiment Tuesday, saying it’s important to separate the real economy from the stock market.
Benchmark 10-year notes were last down slightly in price to yield 2.8054%, from 2.766% late on Monday.
Early this morning U.S. time, Dow futures predicted the industrial average would open approximately 220 points down.
In Toronto, the SP/TSX composite index was lower by 0.3 per cent at 15,283 points – marking its seventh consecutive day of declines.
How are global markets reacting?
Corrections are seen as entirely normal during bull markets, and even helpful in curbing excessive gains and allowing new investors to buy into the market at lower prices. This week’s drop could test their resolve. And over the years, that has made them a lot of money. “They love it, but they’re also respectful and terrified”.
After big moves higher and lower, US stocks are surging Tuesday afternoon, raising hopes for an end to a global sell-off. Inflation has been relatively dormant since the recession. “It would be more worrying if markets didn’t react to all of this”, he added.
Monday’s decline extended the 666-point drop that happened Friday, a drop of about 2.5 percent.
On Monday, the VIX had surged to its highest level since 2015.
US stocks rose in early trading as markets around the world stabilized after a rout that began on Friday.
Those concerns echoed worldwide.
The other main European markets are expected to recover today as well. The Dow notched its biggest intraday decline in history with a almost 1,600-point drop.
According to John Husselbee, a multi-asset fund manager at Liontrust, the “three Cs” are key to short-term market sentiment: China, commodities and central banks.
“I look at the broader factors that are driving this sell-off, and it’s really the pick-up in interest rates that seems to be at the heart of the anxiety in the marketplace”, said Craig Fehr, a Canadian markets strategist at Edward Jones in St. Louis.
The RBNZ does not expected inflation to reach 2 per cent until the third quarter of 2020, so a rate hike is not on the cards any time soon.
The strengthening economy is translating into not only stronger profits for companies but also better sales, something that investors have been keen to see.
Global stock markets have started to claw back the steep losses racked up over the past couple of days, with the United States markets leading the way.
Investors and the trillions of dollars they control, it turns out, have minds of their own, as shown by the stock market’s dizzyingly steep declines on Friday and Monday and the volatility that extended into Tuesday.
The SP 500 gained 0.3 per cent to 2,657 points. The biggest decline in percentage terms was on May 6, 2010, when the “flash crash” resulted in more than a 9 percent fall. That’s a record number of days.