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Dow industrials drop 600 points, extending a weeklong slump

Dow industrials drop 600 points, extending a weeklong slump

The optimism helped lift stock markets ever higher, extending the boom into its ninth year.

"The fundamentals are still OK", said Patrick O'Hare, chief market analyst at the investing website Briefing.com.

Interest rates that are set every day in the global bond markets are already leaping higher, in anticipation of central bank rate increases later this year. The Dow closed slightly higher Thursday, but nonetheless finished about 900 points lower at closing Friday than at Monday's open.

Another comparison: When the Dow plunged a record 22.6 percent on October 19, 1987, it was a drop of 508 points because the average was so much lower at that time. However, the percentage decline was only the worst drop since June 24, 2016, when the gauge fell 3.4%.

All 30 of the Dow's component stocks fell, with energy, technology and financial shares posting some of the heaviest declines. VIX options trading volume hit a record high.

That is not to say the market is collapsing. "And then you get a report, and that's the straw that breaks the camel's back, and that's kind of what we got into today".

"A clear sign that confidence was restored by the jobs report was the fact United States 10-year Treasuries hit a four-year high immediately after it was released".

Of course, this week's slide does little to dent the overall gains the market has achieved since President Trump's victory.

Optimism over forecasts has caught the attention of anxious investors, who hope that strong earnings can support lofty stock valuations and offset the concerns over rising bond yields and the pace of Federal Reserve rate hikes.

Nonfarm payrolls jumped by 200,000 jobs last month after rising 160,000 in December, the Labor Department said on Friday.

The yield on the 10-year US Treasury note climbed again Friday to 2.85 per cent.

The stock plunge comes after record-breaking market gains under Trump's first year in office.

"The reaction in the bond market is due to the rise in average hourly earnings", said James Ragan, director of individual investor group research at D.A. Davidson. Equities are being tested by the surge in bond yields, with some fund managers saying 3 percent US 10-year rates would signal a bond bear market.

Markets have turned more volatile after a relatively quiet 2017 and first month of 2018.

The Dow Jones industrial average fell 343 points, or 1.3 percent, to 25,841.

Google parent company Alphabet reported quarterly earnings per share that missed Wall Street expectations.

Other exceptions Friday included Netflix and Amazon, up 1 percent and 3 percent, respectively.

The market is heading for its biggest weekly drop in two years.

Among the stocks in the Dow, Apple fell 4.3 percent Friday, Exxon Mobil lost 5.1 percent, Chevron was down almost 6 percent and Goldman Sachs dropped 4.5 percent.

"We haven't had a correction of 5 percent for over 400 days", he said.

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