Published: Sat, February 10, 2018
Global | By Craig Ferguson

Dow rallies to gain 567 points

Dow rallies to gain 567 points

The country's 10-year yield almost surpassed a four-year high of 2.885 percent in the morning trading Thursday, a level that helped trigger a global sell-off in equity markets on Monday. Australia's benchmark S&P ASX 200 slid 3.2 percent to 5,833.30 and South Korea's Kospi declined 1.5 percent to 2,453.31.

In deciding what to focus on - in a stock, say - a typical day trader looks for three things: liquidity, volatility and trading volume.

Boeing (BA.N) rose 2.7 percent, providing the biggest boost to the Dow and S&P. Heating oil dipped 3 cents to $1.99 a gallon.

It's the fourth ugly day in global markets.

Major Asian markets suffered sharp losses on Friday, following another day of steep falls on Wall Street. Most Asia indexes were positive overnight.

Some investors, however, fear the market is over-stretched in the context of higher inflation and rising bond yields as central banks withdraw their easy money policies of recent years.

Equity options trading volume, already elevated this week, is likely to pick up as February contracts approach expiration next week, said Jon Cherry, head of United States options at Northern Trust Capital Markets in Chicago.

Adding to investor concerns, the measure of stock market volatility (VIX) surged over the next month, climbing above 50 - the measure's highest level since 2015.

The steep declines spooked stock investors who yanked a record $30 billion out of stock funds in the week ended February 7, according to EPFR Global. That's why everybody is going back and forth.

"The conversation about equity risk premium, interest rates and inflation, we are coming full circle". "Be careful what you wish for".

Bond prices fell. The yield on the 10-year Treasury note rose to 2.86 percent from 2.83 percent.

The yield on the 10-year Treasury bond ticked higher again on Thursday morning, to 2.88%.

The bull market has feasted on extremely low bond rates.

"In the context of the rises we've seen, certainly this kind of pull-back of 5-10% is quite normal for markets - it just hasn't been normal for the last couple of years where we've seen very low levels of volatility and very small levels of weekly or monthly moves".

Investor concerns over inflation was reflected in Lipper funds data on Thursday, which showed USA -based inflation-protected bond funds attracted $859 million over the weekly period, the largest inflows since November 2016.

Some believe the 3 per cent yield is inevitable.

Thursday's fluctuations came despite good economic news.

Twitter had a banner day, soaring 12 percent after turning in a profit for the first time. Higher rates act like a brake on the economy by slowing down borrowing and lending.

Wholesale gasoline lost 4 cents to $1.81 a gallon. He said investors are now selling because they are afraid of bigger losses if they stand pat. Accelerating inflation may crimp corporate profits. Fast rising interest rates would make that argument much less persuasive.

"The primary culprit was higher-than-expected wage growth in the January jobs report, which may have increased fears that the Federal Reserve would be more aggressive with interest rate hikes in 2018", according to LPL.

"Though never any fun to endure", it said, "pullbacks are a normal course for long-term investing". Several Dow members lost more than five percent, including American Express and Home Depot.

On Monday, February 5, 2018, the Dow plunged by nearly 1,600 points and this decline is the biggest decline in points seen in history.

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