Stock markets plunge, Dow and S&P 500 in 'correction'

UPDATE: US stocks bounce back from correction territory but record sizable weekly losses

UPDATE: US stocks bounce back from correction territory but record sizable weekly losses

The Dow Jones Industrial Average fell 132.73 points, or 0.56 percent, to 23,727.73, the S&P 500 lost 6.69 points, or 0.26 percent, to 2,574.31 and the Nasdaq Composite dropped 18.53 points, or 0.27 percent, to 6,758.63.

At the time of writing (5.45am), the Dow Jones Industrial Average was down 404 points.

Next week, coming off one of the most volatile stretches in years, two important readings on US inflation could help determine whether the stock market begins to settle or if another bout of volatility is in store.

As big as the Dow's drop seems to be, it has only taken the Dow back down to levels that it first hit in November.

Overall, Dr Oliver said the correction in the USA and Asian markets, and the slump in the Australian one, was not something to be overly concerned about, adding "in the absence of a recession, a deep bear market is unlikely". Bond prices move inversely to yields. Furthermore, the 10-year Treasury Yield was up by a total of 2.845% just before the market closes. That makes the current downswing an official Dow correction, and many investors responded by showing signs of panic, selling off stocks at any cost. Many market watchers have been predicting a pullback for some time, saying stock prices had become too expensive relative to company earnings. USA economic growth was running at a 2.6 annualized rate in the fourth quarter last year and the unemployment rate is at a 17-year low of 4.1 percent.

The pan-European FTSEurofirst 300 index lost 1.89 per cent and MSCI's gauge of stocks across the globe shed 1.26 per cent. GrubHub jumped $21.44, or 30.7 percent, to $91.34, while Yum Brands dipped $1.22, or 1.5 percent, to $78.91.

"Expect more volatility from here", said Jeremy Hale, the head of asset allocation and global macro at Citi, in a note on Thursday.

"We have an environment where interest rates are rising".

Stack isn't predicting a bear market yet because the economy is so strong. "You're seeing real changes occur and different investments are adjusting to that", O'Rourke said.

To put the day's move in a broader context, the point drop in the Dow (which is a basket of 30 large US company stocks versus the 500 or so stocks in the S&P) was just 2.1%. Thursday's sell-off actually put the Dow and the S&P 500 Index into 10% correction territory.

Redemptions from European Equity funds reached 80-week highs, data from EPFR showed, while the pan-regional STOXX 600 .STOXX index ended at 368.61 points, down 1.5 percent on the day and 5 percent on the week, its worst week in 2 years.

Even with the sharp declines, stocks finished above their lows touched during the session.

Tyson Foods, rose 7.7 percent after the No. 1 USA meat processor, reported better-than-expected quarterly results.

Elsewhere, oil prices continued to lose ground, pushing Woodside down 1.6 per cent and Santos down 2.2 per cent.

Trader Gordon Charlop worked on the floor of the New York Stock Exchange, today.

It was another topsy turvy day on Wall Street. The Dow gained 330.44 points, or 1.4 percent, to 24,190.90. The company's stock closed the trade by almost 10% jump, after dropping by 4% before the start of the session.

"The global bond bubble is leaking air", Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a note to clients after the Treasury auction. "There's kind of an emotional reversal that's going on".

Chipmaker Nvidia (NVDA.O) was up about 0.9 percent after its upbeat results and forecast.

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