Dow rallies back, ends trading day sharply higher

Stock markets continue to fall amid interest rate hike fears

Stock markets continue to fall amid interest rate hike fears

The S&P 500 closed down 3.8 percent, Dow Jones Industrial Average 4.2 percent and NASDAQ Composite 3.9 percent.

In Toronto, the S&P/TSX composite index was down 264.97 points, or 1.73 per cent, to 15,065.61, in a broad-based decline. "The sellers remain in clear control right now as a lot of the excess froth we saw in January, has now been unwound or erased", said Adam Sarhan of 50 Park Investments.

"It looks to me like a typical type of scenario when you see a single stock flash crash where you'll see bids just disappear, stop orders get kicked", said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The market began falling in the first few minutes of trading, and the pace of the declines worsened as the day wore on. But a steady climb that lasted more than a year has given way to two weeks of shaky selling.

Investors fear that low unemployment, increasing USA growth and rising wages will spur the Federal Reserve to raise interest rates, which would boost the cost of borrowing money.

Recently, good news for the economy has been viewed as a negative for stocks, as investors fear the Federal Reserve might need to hike interest rates more aggressively to cool things off.

The 10-year notes last rose 38/32 in price to yield 2.7093 percent, down from 2.852 percent late on Friday. Boeing, Goldman Sachs and Home Depot took some of the worst losses.

After plunging 666 points last Friday and 1,175 points on Monday, the Dow seemed to stabilize at just under 25,000 on Tuesday, oscillating between 600 points up at its highest and 560 points down at its lowest.

Markets enter correction territory when they fall 10% or more from a previous high.

The S&P 500 index showed three new 52-week highs and 2 new lows, while the Nasdaq recorded 26 new highs and 33 new lows.

U.S. BUDGET BATTLE: Uncertainty overshadowed the fitful market recovery as Senate leaders brokered a long-sought budget agreement Wednesday that would bring the Pentagon and domestic programs an extra $300 billion over the next two years.

The goal was to encourage investors to put their cash to work in the economy - for example, by buying corporate stocks and bonds.

The US stock market is facing a possible third day fall after two days of heavy losses that have undermined faith in the USA stock market's nearly decade-long rally. Microsoft and JPMorgan Chase each lost 1.7 percent. Corrections are seen as entirely normal and even helpful in curbing excessive gains during bull markets. The markets have been unusually calm since late 2016, and he said investors were betting that would continue. Japan's Nikkei 225 index was an exception, although it ended trading flat, gaining a mere 0.16 per cent. USA crude fell 2.5 percent to settle at $61.79 per barrel and Brent dropped 2 percent to $65.51.

In currency trading, the dollar fell to 109.02 yen from 109.54 yen late Tuesday.

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