Dow Falls 430 Points as Bond Yields Surge and China Tensions Grow

Caution remains the key word across global markets as investors try to gauge whether the recent selloff has room to run

In Canada, the S&P/TSX composite index was down 238.87 points or 1.51 per cent, to 15,615.18.

During the regular session, the S&P 500 marked its biggest daily percentage fall since February 8 - 3.3 percent - and Nasdaq registered its biggest fall since June 24, 2016 - 4.1 percent - as rising U.S. Treasury yields sent investors fleeing from risky assets.

The Dow Jones industrial average tumbled more than 400 points to just below 26,000 at lows. That decline came after the Dow's largest single-day drop in history, when it fell 1,175 points earlier that month.

Amazon lost 6.2 per cent and Netflix gave back 8.4 per cent. The Nasdaq's 2-percent drop pulled it 7.1 percent away from its high.

The yield on the 10-year U.S. Treasury bond, which rose to new seven-year highs last week, continued to move higher, yielding as much as 3.24 per cent on Wednesday.

The 10-year yield is now 3.20 percent, the highest in than seven years and up sharply form 2.82 percent in late August. Stocks continue to retreat on Wednesday, with 10 of the 11 sectors in the red and bond yields continuing to march higher.

Oil prices fell more than two percent as US stocks plunged, even though energy traders anxious about shrinking supply from Iran due to US sanctions and kept an eye on Hurricane Michael, which closed almost 40 percent of US Gulf of Mexico output. And right now tech stocks-like the trillion-dollar Apple-have dominated a significant part of the rise in value of the market as a whole.

United States crude settled down $1.79 at $73.17 per barrel and Brent fell $1.91 to settle at $83.09. It was at just 3.05 percent early last week.

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Although the losses were widespread, stocks that have been the biggest winners on the market, including technology companies and retailers, suffered steep declines. Brent crude, the global standard, lost 2.2 per cent to US$83.09 a barrel in London.

All of these stocks have seen sharp gains on the year and yet investors have been quick to sell-off and take profits as they shift into more conservative securities like bonds and treasury notes.

Wholesale gasoline shed 2.7 per cent to $2.02 a gallon.

S&P 500 e-mini futures EScv1 and Nasdaq futures NQcv1 were both down 0.1 percent. Silver dipped 0.5 per cent to $14.33 an ounce. The Nasdaq fell 177 points, or 2.3 percent, to 7,560.

He notes that while the USA stock market has managed to post gains virtually uninterrupted, that's not the case in most other parts of the world, so that trend may be finally catching up in North America.

Japan's Nikkei 225 added 0.2 per cent, South Korea's Kospi dropped 1.1 per cent and the Hang Seng in Hong Kong gained 0.1 per cent.

The CAC 40 in France dropped 2.1 per cent, Germany's DAX lost 2.2 per cent and the FTSE 100 in London fell 1.3 per cent.

As investors look for safe bets, utility stocks, which tend to pay big dividends, were also rising slightly Wednesday. Brazil's Bovespa lost 2.5 per cent and the Merval in Argentina sank 2.2 per cent. The British pound rose to $1.3197 from $1.3146.

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