Rising U.S. bond yields bring back Wall Street's sinking feeling

Rising U.S. bond yields bring back Wall Street's sinking feeling

Microsoft lost 1.4 percent in early trading Wednesday and 3M gave up 1.6 percent.

Mona Mahajan, US investment strategist at Allianz Global Investors, said: "The market is digesting the potential that rates moving upwards eventually seep into the real economy in the form of mortgage rates, auto rates, student lending rates".

When all the dust settled after a brutal session, the Dow Jones Industrial Average had lost 3.2 per cent or 830 points to finish at 25,498.74, in the biggest fall since February.

Rising interest rates by the Federal Reserve drove US Treasury yields to 7-year highs, while Hurricane Michael's landfall in Florida stoked fears of impact on energy companies, according to market analysts. Concerns about consumer spending have also led to jitters about USA companies as they prepare to unveil results for the third quarter of the year over the coming weeks. It's fallen 7.5 per cent in just five days.

Boeing shed 3.3 per cent to US$372.58 and 3M fell 2.2 per cent to US$205.77.

All 30 Dow stocks were in the red, sending the index below 26,000 points for the first time in a month.

Stock prices have been hurt by rising interest rates, which have boosted Treasury yields over the last week.

"Both companies highlighted rising costs, not only input costs but increasing operating expenses (and) marketing expenses", she said. Investors see many of these countries as being vulnerable to higher US interest rates, which can pull away investment dollars.

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The rise in rates is weighing particularly heavily on areas of the market that had earlier been the biggest winners, and technology stocks had some of the morning's steepest losses.

Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles per hour.

U.S. stocks notched solid gains in the third quarter as investors brushed aside worries about trade wars and focused on strong corporate earnings and solid United States economic data. It was at just 3.05 percent early last week. That's helped make technology stocks more volatile in the past few months.

Although that's largely because the U.S. economy is so strong, the spike in rates for the benchmark USA 10-Year Treasury has investors wondering if the near-decade-old bull market may finally be ending.

Sears Holdings plunged 37 percent after the Wall Street Journal reported that the struggling retailer is preparing a bankruptcy filing. Over the years, Sears has closed hundreds of stores and sold several famous brands. The current benchmark interest rate is 2 to 2.25 percent.

Tom Cahill of Ventura Wealth Management said investors were also unnerved by remarks from luxury company LVMH of a crackdown on some goods in China amid the country's bitter dispute with the United States. Heating oil fell 1.2 per cent to $2.39 a gallon. "As stocks go down, tech goes down more than the stock market".

Japan's Nikkei 225 added 0.2 percent, South Korea's Kospi dropped 1.1 percent and the Hang Seng in Hong Kong gained 0.1 percent. Brazil's Bovespa lost 2.5 per cent and the Merval in Argentina sank 2.2 per cent.

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