Stock market plunges again, enters first correction in 2 years

Stock market plunges again, enters first correction in 2 years

The Dow Jones Industrial average made headlines this week by experiencing its biggest ever plunge, not once but twice. On Friday, the intraday low for the tech-heavy Nasdaq also pulled it more than 10 per cent from its recent peak.

At midday, the market was on pace for its worst weekly drop since October 2008, at the height of the financial crisis.

Earlier, the Shanghai Composite Index tumbled as much as 6.0 percent to its lowest since May 2017, and the blue chip CSI300 index dived 6.1 percent.

Stocks posted sharp losses Thursday with the Dow shedding 1,032 points, as higher interest rates continued to rattle investors. On Friday, a key gauge of global stock indexes was down more than 1 percent, while European shares ended down 1.4 percent.

The technology-heavy Nasdaq composite was near correction territory, off 9.7 percent from its January 26 high through Thursday.

When oil prices fall, the loonie typically follows suit, especially against the greenback as oil prices are denominated in USA dollars. The yield on the 10-year Treasury note rose to 2.84 percent.

Stocks struggled to stabilize Friday as investors sent prices climbing, then slumping in unsteady trading a day after the market entered its first correction in two years. A correction is defined as a 10% drop from recent highs, and the Dow is down by 10.4%.

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The rout marked a stark turnabout in investors' mood from just two weeks ago, when indexes set their latest record highs.

The Dow Jones industrial average plunged more than 1,000 points twice this week. As part of its rate hike agenda, the Fed had planned three 0.25 percent rate hikes this year, with two more in 2019. It's still up 14 percent over the past year. But stocks weren't the only group that suffered this week, as dollar-denominated gold and oil prices endured their worst weekly losses in two months and two years, respectively.

The Dow Jones Industrial Average traded 500 points lower at one stage during the day, but closed 330 points or nearly 1.4 per cent up.

Financial analysts regard corrections as normal events but say the abrupt stock market rout that began last Friday might have been triggered by a combination of events that rattled investors.

FedEx and UPS dropped about 2 per cent after the Wall Street Journal reported Inc will be launching its own delivery service. For example, on October 19, 1987, when the Dow lost almost 23% of its value in a single day, that was a crash. And on Thursday's opening bell, it moved from positive to negative, and dropped sharply. Tokyo's Nikkei 225 lost 2.3 percent and Hong Kong's Hang Seng gave up 3.1 percent.

The record one-day fall for the Dow was a 508-point drop in October 1987, which wiped more than 20 per cent off the value of the leading United States companies.

Equities for years have looked relatively attractive compared to the low yields offered by bonds, but the rise in Treasury yields has diminished the allure of stocks, especially with stock valuations at historically expensive levels.