Stocks go on a wild ride, briefly sending Dow down 1600

People walk on Wall St. in front of the NYSE in New York

People walk on Wall St. in front of the NYSE in New York

But inevitably investors took advantage of the sharp drop in prices to come back into the market, sending the key indexes higher. Defensive sectors including utilities and real estate lagged. On Twitter, he declared that stocks would rise even higher once his $1.5 trillion tax cut was "totally understood and appreciated". At one point, the Dow fell 6.3 percent or 1,597 points, the biggest one-day points loss ever, as it breached both the 25,000 and 24,000 levels during trading.

On Bay Street, the S&P/TSX composite index was down about 113 points, or 0.74 per cent, at 15,217.37 points in early afternoon trading.

The Dow index provides a price-weighted average of 30 stocks that are traded on the New York Stock Exchange (NYSE) and the NASDAQ.

Gains in industrial and consumer discretionary stocks led advances on the S&P as well as the Dow.

The sell-off wiped out the Dow and S&P 500 gains for the year, and left the Nasdaq barely in positive territory for 2018.

With the latest drops, both the Dow and the broader S&P 500 are down more than 10 percent from their peaks on January 26, which constitutes a market correction.

"In the 'old days, ' when good news was reported, the Stock Market would go up".

The same is true of many global markets, where investors have been bracing for a correction while hoping not to see one. "Corrections are caused by people having to reposition for new environments".

Worries about future inflation and rising interest rates also weighed on the market again Thursday.

But with the Federal Reserve seen likely to raise short term interest rates again three or four times in 2018, bond yields have been rising, and last Friday's healthy USA labor market report sparked fears of rising inflation, leading to Monday's sharp bout of profit taking.

That usually means that the Federal Reserve will start increasing interest rates.

Schutte, of Northwestern Mutual, added that corrections can end quickly, and they often do so when investors see evidence of continued economic growth.

Michael Thompson, managing director at S&P Global Market Intelligence, said the sudden selloff "struck him as more of an emotional than rational move, likely exacerbated by speculative money in the market and jittery retail investors".

White House press secretary Sarah Sanders downplayed the stock market drop as a part of a normal seesaw of the market but maintained that the overall direction of the economy under Trump is strong.

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    Schutte added that corrections can end quickly, and they often do so when investors see evidence of continued economic growth. The market's turmoil began last Friday and has continued this week as investors anxious about early signs of inflation.

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