Oct 11, 2018, 4:33 PM ET

Dow plunges another 500 points, massive sell-off extends into 2nd day

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U.S. stock futures plunged 500 points Thursday, extending its two-day loss by more than 1300 points.

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Dow Industrial Average Futures closed 546 points or 2.1 percent lower at 25,052.83, totaling more than 5 percent in losses since Tuesday's close.

The tech-centric NASDAQ ended 1.3 percent lower at 7,329.06. S&P 500 futures closed at 2,728.36, down 2 percent. Previously high-flying tech stocks extended losses on Thursday.

The two biggest U.S. companies continued losing value, with Amazon shares ending 2.0 percent lower and Apple shares closing down 0.9 percent.

The recent rise in interest rates, while not sudden, is adding to investors anxiety about the markets, Mike Matousek, head trader at U.S. Global Investors, told ABC News.

"Quantitative easing was great -- the Fed was buying U.S. bonds. Now that they’re tapering off and not buying as much, but the government still has to issue bonds to fund the government. And nobody wants to buy bonds because rates are higher, and it costs more and you’re going to lose money because the Fed keeps raising rates. Why would I buy something that will cost me something in the future when I know it ahead of time?" Matousek said.

Growing trade tensions with China -- the largest holder of U.S. foreign debt by far -- is also adding to market insecurity.

As a result of the trade war, "China is selling our treasuries and bonds. If you borrow a lot of money from the bank, they own you. China is the bank," Matousek said.

President Trump defended his policies and continued his long-running feud with the Federal Reserve on Thursday, attacking its current policy of continuing to raise interest rates.

"It's a correction that I think is caused by the Federal Reserve, with interest rates," Trump said.

The central bank has raised rates three times this year and another rate hike is expected in December.

"We have interest rates going up at a clip that's much faster than certainly a lot of people, including myself, would have anticipated. I think the Fed is out of control. I think what they're doing is wrong," Trump added. "Under the Obama administration, you had a lot of help, because they had very little interest. You know, when you talk about economies, our economy is far better than that, but we have actually -- we're paying interest, and they weren't. They were using funny money."

"But I think the Fed is far too stringent, and they're making a mistake, and it's not right. And it's -- despite that, we're doing very well, but it's not necessary, in my opinion. And I think I know about it better than they do, believe me," Trump said.

He added that he would not fire Chairman Jerome Powell.

A woman walks past an electronic board showing Hong Kong share index outside a bank In Hong Kong, Thursday, Oct. 11, 2018. Asian markets tumbled on Thursday, after Wall Street slumped on a heavy selling of technology and internet stocks. (AP Photo/KiThe Associated Press
A woman walks past an electronic board showing Hong Kong share index outside a bank In Hong Kong, Thursday, Oct. 11, 2018. Asian markets tumbled on Thursday, after Wall Street slumped on a heavy selling of technology and internet stocks. (AP Photo/Ki

Wednesday 'Tech Wreck'

The benchmark Dow index fell 831 points to close at 25,598.74 on Wednesday, wiping out 3.2 percent of its value in the sharpest drop since February.

Paul Sankey, a managing director at Mizuho Securities, mentioned Wednesday's dramatic market slide in his morning note to investors.

"Obviously the backdrop was the 800 point drop in the Dow yesterday, which had the traders shouting 'tech wreck!' as I crossed the floor in the afternoon when the market slide turned into a rout," Sankey wrote.

The decline came amid a widespread sell-off on Wall Street, which spilled over into global markets overnight as investors reacted to the "sheer magnitude of the move," OANDA analyst Stephen Innes wrote in a note to investors.

"Equity markets were pulverized today as investors remain in full out retreat and even the most pessimistic of equity bears are still in shock by the sheer magnitude of the move," he added. "This meltdown isn't just a mild case of the sniffles suggesting the latest sneeze from the U.S. equity market could morph into a global markets pandemic."

Ryan FalveyThe Associated Press
Ryan Falvey

Gregory RoweThe Associated Press
Gregory Rowe

Innes, the Singapore-based head of Head of Trading for Asia Pacific with OANDA, attributed the slide to a combination of factors, including the possibility further interest rate hikes and the battle over tariffs between the U.S. and China.

"President Trump's scathing and ramped-up attack on the Fed has the dollar bulls retreating as even the hint of political interference on monetary policy is unsettling," Innes said.

Asia stock indexes added to the global market's pain on Thursday, with benchmarks in Shanghai, Shenzhen and Tokyo all skidding between 4 and 5 percent.

Japan's benchmark index tumbled about 3.9 percent, while China's key index fell 4.3 percent. Market indexes in Hong Kong, South Korea, Australia and Southeast Asia also moved lower.

News - Dow plunges another 500 points, massive sell-off extends into 2nd day

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CComments

  • Thao D

    It is good new for the economy.It can not go high for the recession

  • TechnicalFallVictory

    It's up 200 today. Sorry Trump haters - the sky was not falling, as I predicted. Carry on.

  • george

    I am sure people are looking at the cause and the effect. If Trump's trade policies are the cause then perhaps China selling off debts might be the effect. Whilst he accepts the plaudits for the boom he now need to address the situation and accept he is also responsible for the dip as it is no one else's fault.

  • Ronny Demeyere

    China's exports during the last year rose by + 14.5%, while imports from the US rose by + 14.3%. China's annual surplus with the US has risen to +31.4 bilion dollars. The major technology companies intel, apple now report that all their prices will rise due to trade taxes. Who is the victim of this trade war? It is the ordinary American citizen and the farmers who export to China. But according to the American president, the farmers do not care because they are his best friends. Only the ordinary American citizen will have to pay far more everywhere.

  • mtntrek3

    Eh, it's looking as though it'll rebound today, hopefully. Overall though, it's a house of cards. Over speculation and over leveraging, which lead to bubbles that eventually burst. A crap shoot controlled by the high rollers at the end of the day. Sadly, their games can lead to economic ruin for the rest of us (on main street).

  • Ptah

    This sell off cost me $18K. But you know What? If it helps people realize that that it's time to throw Trump's facilitators and co-conspirators out of congress and put the Democrats in charges, it's worth every penny.

  • SoCalSteve

    Better get into commodities.
    Metals and Mining
    Oil Drillers
    Oilfield Services

  • DeWitt Vargas

    Yeah , but her emails!!!

  • scott graham

    Doesn't this just seem to keep happening every few October's, usually after a big run up. Could it be more about funds trying to lock in profits before the end of the year? Shifting to stocks that make money during the Christmas season like energy issues and retail?

  • DeWitt Vargas

    #WINNING!

  • John Smith

    Love the comments about it just correcting itself. Of course it’s correcting itself to all the crap trump did to it

  • Marc

    Such a drama queen you are ABC. This has happened a thousand times before and will happen a thousand times in the future. and there is really no logic to it other than speculation on the part of the traders. "Markets tank because Wal-Mart CEO ate burnt toast and had a wet fart". Low and behold the markets next week will rally and erase all of the losses , but that's not dramatic so it will not make news . Look at where the markets are now, they have been on fire and have made people a lot of money since the crash of 08

  • Jamie Vetter

    More markets are open now, China, Korea, Australia and India are bucking the trend we have in the US. Their markets are going up.

  • Jamie Vetter

    I see China just posted its largest trade surplus with the US in history, which is the opposite of what Trump thought would happen. Our farmers can't sell them grain but they're still selling stuff to us. Don't expect to see talk radio or fox mention this.

  • westbrazos

    Looks like a trillion dollar debt and eliminating the EPA restrictions on company polluters,will only bring the economy and jobs around for a short period.

  • Jamie Vetter

    Did anyone see the comedy routine about Hannity and how he condemned rap musicians under Obama but praises them under Trump. Funny stuff. Are conservatives used to being fed a diet of waste that they don't care about intellectual consistency? Do they believe "in anything" other than hating Democrats?

  • SearingTruth

    Well, at least the pledge of allegiance has been shortened fellow citizens.

    I pledge allegiance, to Donald Trump, mumble mumble ...
    ST

    "An ideal of ultimate humanity and a people willing to defend it. That used to be America."
    SearingTruth

  • Jamie Vetter

    Wouldn't it be interesting to see Asian investors dump US stocks as a kinda "in your face" kinda thing?

  • Colinalcarz

    The market is doing exactly what Cohn and others told Trump it would do if he went ahead with tariffs. Trump wanted to own the upturn so he has to own the downturn as well, there is more to come.

  • David Hoffman

    Actually attempting to interfere with the Federal Reserve is political suicide. It has been that way for many decades. From Carter until today all USA Presidents have at times disliked the actions of the Federal Reserve.

    The Federal Reserve only cares about having low inflation. If they have to destroy the entire economy to accomplish that then they will do it. Republican President or Democratic President, it does not matter, the Federal Reserve will kill off a substantial percentage of the USA economy if they believe that action is needed to reduce inflation. If the Congress and the President take actions that increase inflation too much then the Federal Reserve will take action. It is not personal, it is business. It's what they do. Scorpions sting. They just do. It is not directed at you because they don't like you, it's just what they do.

  • SearingTruth

    Gosh darn Mexicans fellow citizens.

    And Muslims.

    Who would have thought they could be so insidious?

    Doing all that American stuff and not pledging allegiance to President Trump ...

    Grrrr ....
    ST

  • BannedAgain

    At least you libbies have something new to whine about. Kavanaugh was getting old.