Dow Plunges: Another 1000 Point Drop In One Day On Rate Hike Fears

I will keep readers apprised of this situation.  It would seem my prediction of a 20% drop within the next two months might have been close to the mark, if not overly conservative...


The dread that gripped equity markets earlier in the week suddenly re-emerged mid-Thursday as U.S. stocks plunged on concern that rising interest rates will drag down economic growth.

The S&P 500 tumbled as much as 2.4 percent, erasing its gains for the year, while the Cboe Volatility Index was more than double its level a week ago. Ten-year Treasury yields flirted with four-year highs after pulling back briefly when the S&P hit session lows. The yen found traction as a haven from the stock turmoil.

Traders remain on edge after the resurgent threat of inflation and higher bond yields helped trigger the burst of volatility and a pullback across the overheated global equity market.

Bulls may have to question the wisdom of buying the dip when more selling by speculators may be imminent. This week’s Treasury auctions have underwhelmed, raising the possibility that the debt selloff could steepen. Investors are also facing the prospect of Fed tightening, which could cool growth.

“There’s some big-money players that have really leveraged to the low rates forever, and they have to unwind those trades,” said Doug Cote, chief market strategist at Voya Investment Management. “They could be in full panic mode right now.”


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