North American markets tumbled again Thursday, as choppy trading gave way to broad-based stock declines late in the afternoon.
Investors are contending with multiple concerns, including rising borrowing costs that could dampen economic growth and growing tensions between Beijing and Washington. Worries about rising interest rates eased briefly early in the day after a report showing muted inflation helped send yields on government bonds lower.
But jitters emerged again in the afternoon, when declines in the S&P 500 began to gather pace. Shortly before 3 p.m. Eastern time the broad index was again down more than 2 per cent. That was on top of a 3.3-per-cent decline the day before. Should the S&P 500, the market benchmark, close lower Thursday, it would be the sixth straight daily decline.
The Dow Jones Industrial Average closed down 545.91 points, or 2.13 per cent, to 25,052.83, the S&P 500 lost 57.31 points, or 2.06 per cent, to 2,728.37 and the Nasdaq Composite dropped 92.99 points, or 1.25 per cent, to 7,329.06.
In Toronto, the S&P/TSX composite index fell 200.27 points, or 1.29 per cent, to 15,317.13.
Energy stocks dropped 3.4 per cent, led by a 5-per-cent decline in Suncor Energy Inc. and a 3.8-per-cent dip in Canadian Natural Resources Ltd.
Financial stocks lost 2.2 per cent. Sun Life Financial Inc. was down 3.3 per cent, while Manulife Financial fell 3.2 per cent.
“The global economy and markets are in a delicate situation,” said Carsten Brzeski, chief economist at ING Bank in Frankfurt. “While the status quo is still good, risks are increasing.”
Stocks were hit particularly hard in Asia, where no market was spared in the sweeping sell-off. Stocks in Shanghai, Tokyo, Seoul and Hong Kong dropped 4 per cent or more in a punishing trading session.
Europe’s major stock indexes fell less drastically — by about 1.5 per cent — because they had already been on a downward trend for several months.
The recent selling reflects a significant change in Wall Street’s mood, which had been ebullient amid strong corporate profits.
But a variety of forces have started to weigh on investors. The Federal Reserve is expected to increase interest rates further, which could raise the cost of borrowing in the United States and around the world.
Another factor is the simmering tensions between Washington and Beijing, which appear to be getting worse. On Wednesday, U.S. officials said they had charged a Chinese intelligence official with espionage. The Trump administration also moved to more closely scrutinize corporate deals by foreign investors in the United States, a step aimed primarily at China.
Commodity prices also tumbled Thursday, with the decline in oil prices, for example, weighing on shares of energy producers.
In Shanghai, stocks closed down more than 5 per cent, around their lowest level since November 2014.
Oil prices slumped to more than two-week lows on Thursday as global stock markets fell, with investor sentiment made more bearish by a bigger-than-expected build in U.S. crude inventories.
Brent crude futures fell $2.83 to settle at $80.26 a barrel, a 3.41-per-cent loss, after hitting a low of $79.80, its weakest since Sept. 24. The global benchmark has retreated after hitting a four-year high of $86.74 on Oct. 3.
U.S. West Texas Intermediate (WTI) crude futures fell $2.2 to settle at $70.97 a barrel, a 3.01-per-cent loss. WTI hit its lowest since Sept. 21.
U.S. crude inventories rose 6 million barrels last week, the Energy Information Administration said, more than double analysts’ expectations of a 2.6 million-barrels increase.
“The significant increase in crude oil inventories is a reflection of refineries going down for maintenance,” said Andrew Lipow, president of Lipow Oil Associates.
The New York Times News Agency and Reuters