Dow Industrial Average Futures closed 546 points or 2.1 percent lower at 25,052.83, totaling more than 5 percent in losses since Tuesday’s close, ABC News reported.
The tech-centric NASDAQ ended 1.3 percent lower at 7,329.06. S&P 500 futures closed at 2,728.36, down 2 percent. Previously high-flying tech stocks extended losses on Thursday.
The two biggest U.S. companies continued losing value, with Amazon shares ending 2.0 percent lower and Apple shares closing down 0.9 percent. The recent rise in interest rates, while not sudden, is adding to investors anxiety about the markets, Mike Matousek, head trader at U.S. Global Investors, told ABC News.
“Quantitative easing was great — the Fed was buying U.S. bonds. Now that they’re tapering off and not buying as much, but the government still has to issue bonds to fund the government. And nobody wants to buy bonds because rates are higher, and it costs more and you’re going to lose money because the Fed keeps raising rates. Why would I buy something that will cost me something in the future when I know it ahead of time?” Matousek said.
Growing trade tensions with China — the largest holder of U.S. foreign debt by far — is also adding to market insecurity. As a result of the trade war, “China is selling our treasuries and bonds. If you borrow a lot of money from the bank, they own you. China is the bank,” Matousek said.
President Donald Trump defended his policies and continued his long-running feud with the Federal Reserve on Thursday, attacking its current policy of continuing to raise interest rates. “It’s a correction that I think is caused by the Federal Reserve, with interest rates,” Trump said.
ABC News adds that the benchmark Dow index fell 831 points to close at 25,598.74 on Wednesday, wiping out 3.2 percent of its value in the sharpest drop since February.
Paul Sankey, a managing director at Mizuho Securities, mentioned Wednesday’s dramatic market slide in his morning note to investors.
“Obviously the backdrop was the 800 point drop in the Dow yesterday, which had the traders shouting ‘tech wreck!’ as I crossed the floor in the afternoon when the market slide turned into a rout,” Sankey wrote.
The decline came amid a widespread sell-off on Wall Street, which spilled over into global markets overnight as investors reacted to the “sheer magnitude of the move,” OANDA analyst Stephen Innes wrote in a note to investors.
“Equity markets were pulverized today as investors remain in full out retreat and even the most pessimistic of equity bears are still in shock by the sheer magnitude of the move. This meltdown isn’t just a mild case of the sniffles suggesting the latest sneeze from the U.S. equity market could morph into a global markets pandemic,” he added.
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