Wall Street closes in correction territory as stocks tumble

Specialist John McNierney right works with traders at his post on the floor of the New York Stock Exchange Friday Feb. 9 2018

Specialist John McNierney right works with traders at his post on the floor of the New York Stock Exchange Friday Feb. 9 2018

From Friday, February 9:UNDATED (AP) _ Wall Street has capped a day of wild swings with a late-afternoon rally that reversed steep early losses and sent the Dow Jones industrial average higher.

The Dow lost 1,032.89 points, or 4.1 percent, to 23,860.46.

China was the worst performer in Asia on Friday - on track for its worst day in almost two years - as losses deepened from declines seen earlier this week.

Asian markets also followed USA stocks down after the Dow, coming off a record high, entered a correction - or a 10 percent decline from its latest peak - for the first time in two years. "Prior to the price action over the last ten days, the major USA indices had rallied nearly without interruption since the Brexit vote in June 2016", said David Morrison, senior market strategist at GKFX. The Dow has had two 1,000-point drops this week.

The S&P 500 rose 38.55 points, or 1.5 percent, to 2,619.55. The Nasdaq composite added 97.33 points, or 1.4 percent, to 6,874.49. The yield on the 10-year Treasury note fell to 2.82 percent from 2.84 percent.

In Europe, Germany's DAX fell 1.2 percent, while France's CAC 40 lost 1.4 percent. She says that and higher wages may lead to higher inflation and the Federal Reserve becoming more aggressive in raising interest rates.

After a sharp loss Wednesday, benchmark USA crude lost 76 cents, or 1.2 percent, to $61.03 a barrel in NY.

Financial analysts regard corrections as a normal market event but say the unusually abrupt plunge might have been triggered by a combination of events that rattled investors.

Other Asian markets also slumped as the Dow entered "correction" territory for the first time in two years.

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On Wall Street, many companies that rose the most over the previous year have borne the brunt of the selling.

At the heart of this week's pullback in the market has been a rise in USA bond yields due to growing expectations that a robustly performing economy will lead to higher inflation and a steady rise in official interest rates over this year.

In Toronto, the S&P/TSX composite index was down 31.08 points or 0.21 per cent to 15,034.53, after losing almost 280 points and gaining more than 45 points throughout the day.

In Washington, President Donald Trump signed a $400 billion budget deal Friday that sharply boosts spending and swells the federal deficit, ending a brief federal government shutdown. Facebook and Boeing have both fallen sharply.

"When markets experience this kind of turbulence it often takes time to see what the longer-term repercussions may be". Many market watchers have predicted a pullback for some time, saying stock prices have become too expensive relative to company earnings. "However, our view remains that it's just another correction", said Shane Oliver of AMP Capital in a report. "There's a fair amount of volatility in the market, and our belief is the volatility is leaving investors riddled with stress and uncertainty, which is likely to continue".

Corrections of up to 15 percent "are normal", Oliver said. The housing industry is solid. And major economies around the world are growing in tandem for the first time since the Great Recession.

Hanesbrands, which makes underwear, T-shirts and socks, reported a smaller profit than investors expected, and its forecast for the current year didn't live up to analysts' estimates either. The euro dipped to $1.2244 from $1.2248.

Brent crude, used to price global oils, lost 58 cents to $64.23 in London.

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