Dow Jones drops 470 points as market faces rate hike fallout

In this Dec. 6 2018 specialist Peter Mazza works at his post on the floor of the New York Stock Exchange

In this Dec. 6 2018 specialist Peter Mazza works at his post on the floor of the New York Stock Exchange

"Nasdaq is your more growth-oriented story, so the biggest stocks are driving the overall market because they're a bigger chunk of it", said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh. They allow markets to remove speculative froth after a big run-up and give investors a chance to buy stocks at lower prices.

The S&P 500 index slumped 39.54 points, or 1.6 percent, to 2,467.42. The blue chip Dow Jones Industrial Average finished at 22859.60, down 464.06, down 1.99%.

The S&P 500 closed down 2.1 percent, finishing at 2,416 for the day. The technology-heavy Nasdaq composite did even worse, and is now down 20 percent from its record high in August.

The S&P 500 fell 50 points, or 2.1 percent, to 2,416.

The major USA indexes fell 7 percent this week and they've sunk more than 12 percent in December.

Many investors are growing anxious that corporate profits - which drive stock market gains - are poised to weaken.

Today's data from the United States showed that the real GDP in the third quarter expanded by 3.4% (third estimate) and durable goods orders rose 0.8% on a monthly basis in November following October's 4.3% contraction but fell short of the market expectation of 1.6%.

Dow Dives to Lowest Point in 2018 After Fed Rate Hike
Dow Dives to Lowest Point in 2018 After Fed Rate Hike

-The U.S. dollar ticked higher after two days of sharp losses brought on by fears about the economy and slower increases in interest rates.

The Federal Reserve, for its part, was not fazed by recent market movements this week. And there are increasing signs the global economy is slowing, too.

"We would use all available tools" if the economy got significantly worse, Williams said, though he didn't predict the economy would turn south and pledged the Fed would "take the right policy decision to keep this economy strong". Additionally, the Dow closed at its lowest level since October 2017, while the S&P 500 ended the session at its lowest since September 2017.

On average, bear markets have lasted 14 months in the period since World War II, while market corrections have lasted an average of five months. The VIX Volatility Index was higher at 28.38 for a gain of 2.80 points or 10.95%.

The Nasdaq is down 570.40 points, or 8.3 per cent.

"The bond market has been telling us something for about a year, and that is there's not going to be much inflation and there's not going to be a sustained surge in economic growth", said Wren, of Wells Fargo.

The Dow just suffered its deepest weekly plunge since 2008 and the Nasdaq is officially in a bear market.

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