Dow Jones stock index hit by record falls

Dow Jones suffers worst single-day point loss in history

Market insiders were still coming to terms with yesterday's chaotic session, in which the blue-chip index lost more than 1,000 points in about an hour at one stage on the way to its biggest point drop ever.

Some investors, however, fear the market is over-stretched in the context of higher inflation and rising bond yields as central banks withdraw their easy money policies of recent years.

"Markets usually grind to the upside, but fall like a rock", said analyst Naeem Aslam at trading firm ThinkMarkets. In afternoon trading, the Topix was up 1.6% while the Nikkei 225 had risen 1%. The euro fell to US$1.2275 from US$1.2392.

Chipmakers weighed on the Nasdaq 100 Index.

The S&P 500 posted 3 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 28 new highs and 42 new lows.

A 10 percent drop from a peak is referred to on Wall Street as a "correction".

Corrections are seen as entirely normal during bull markets, and even helpful in removing speculative gains and allowing new investors to buy into the market at lower prices. The U.S. Senate reached a bipartisan deal Wednesday that would boost spending limits by $300 billion over the next two years.

The 30-stock average's early free fall briefly pushed it into "correction" territory for the first time in two years after it dropped 10% from its recent record high on January 26. The index closed at just above 21,500 points, down 5 percent.

Consumer-focused companies rose the most in early trading Wednesday.

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The Dow was little changed at 24,334 as of 10:49 a.m.

Technology shares fell 1.4 percent, with Apple down 2.1 per cent, while energy dropped 1.7 per cent as oil prices slumped.

The benchmark S&P 500 and the Dow suffered their biggest percentage drops since August 2011 as a long-awaited pullback from record highs deepened.

It was the third straight trading day of steep losses and extended a worldwide sell-off that saw $4 trillion wiped off the global market.

In a sign of how volatile the market could be, the Dow recovered quickly to gains less than 30 minutes after open.

The swoon began Friday as investors anxious that accelerating inflation and higher interest rates could derail the market's record-setting rally.

Keep the sell-off in perspective, warned Kristina Hooper, chief global market strategist at Invesco. The Dow Jones index, for instance, witnessed its largest point fall in history on Monday, by over a thousand points. The fragile rebound lifted the market a bit, and the Dow and S&P 500 are now about 8% off their from all-time highs.

Apple, however, dipped by 0.5 percent to trade at $162.19 a share. All 30 of the blue-chip Dow industrial components finished negative. That was its biggest loss since August 2011, when stocks were reeling as investors fretted over European government debt and the US credit rating was downgraded after the debt ceiling impasse. Wall Street has been expecting three rate hikes at most.

Additionally, a stronger-than-expected report on wages Friday sparked worries about a return of inflation to the US. Higher Treasury yields make high-dividend stocks like utilities less appealing to investors seeking income.

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