Dow plummets 800 points, biggest drop in 8 months

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USA stocks posted their worst loss since February on Wednesday, the Dow Jones industrial average finishing the day down more than 800 points.

"The stock market in the USA has started to take notice, and will continue to, particularly if the speed at which rates rise becomes alarming", Jeffrey Gundlach, chief executive of Doubleline Capital, told Reuters last week. But at its session low the benchmark fell 2.7 percent to its lowest level since early July.

Investors are also anxious about the ongoing trade war with China and its impact on corporate bottom lines as well as the rising threat of higher interest rates.

US crude dropped 3 percent while Brent crude, the worldwide standard, dropped 3.4 percent. "The marked selloff in rates is the clear catalyst, though that reflects the slow-burning theme of the end of easy money".

"The tax cuts juiced earnings this year and that's not sustainable", he said.

"Any kind of softening of the tensions with China would be a huge catalyst for the market", Feinseths said.

However, the technology sector began bouncing back on Thursday, despite the more than 500 point drop, gaining 0.46 percent.

The Russell 2000 index of smaller-company stocks shed 46.45 points, or 2.9 percent, to 1,575.41. That didn't happen Wednesday as stocks fell further late in the day.

Apple (AAPL), Boeing (BA), Caterpillar (CAT) and Nike (NKE) - Dow stocks that all have a significant presence in China - were among the bigger blue chip losers on Wednesday.

Microsoft dropped 4 per cent to $107.82. The Stoxx Europe 600 was down by 1 percent, with London's FTSE 100 down by a similar percentage.

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

The Nasdaq fell 99 points, or 1.3 percent, to 7,322.

The 10-year Treasury yield rose to 3.22 per cent from 3.20 per cent late Tuesday after earlier touching 3.24 per cent. Intel dipped 3.76 percent today but that might be viewed lightly when you look at team Red and team Green's day on the market. The two-year yield rose to 2.88 percent from 2.87 percent, and the 30-year yield climbed to 3.38 percent from 3.37 percent. When yields rise for that reason, it is generally good for stocks. That will raise the cost of corporate borrowing and could drag on economic growth. They also make bonds more attractive investments.

It will take more than a daily stock market correction to stop the Fed from hiking, said George Goncalves, managing director and head of fixed income strategy at Nomura in NY.

"Amazon recently announced they were increasing wages, Facebook is spending a ton on security", she said. As LPL Financials' Ryan Detrick notes, the S&P 500 just came off its least volatile third quarter since 1963, has been up for six consecutive months, and hasn't closed up or down more than 1% for more than three straight months, "one of the longest streaks ever". All fell at least 3 per cent.

West Texas Intermediate has shed almost $4 a barrel since Tuesday, marking its steepest two-day decline in more than three years.

Oil futures fell. US crude gave up $1.27 to $71.90 a barrel. Brent crude, the global standard, lost 2.2 percent to $83.09 a barrel in London. Amazon dropped another 2% to $1,719.36 and Apple fell 0.9% to $214.45. Natural gas fell 1.9 percent to $3.22 per 1,000 cubic feet.

Gold rose 0.2 per cent to $1,193.40 an ounce. The Japanese yen strengthened 0.53 percent versus the greenback at 112.36. Over the past two days, it has lost more than 1,300 points. Technology stocks fell especially sharply.

Sentiment also has been dampened by the spreading U.S.

In health care, CVS sank 7.2 percent to $73.25 and Aetna sagged 2 percent to $199.37 after the New York Post said New York state regulators have concerns about CVS' purchase of the health insurer.