US markets were plunged into fresh turmoil on Thursday as the Dow Jones plunged by more than 1,000 points and the S&P shed 3.7 per cent, reigniting fears about a severe stock market rout.
The sell-off – which intensified in the last hour of trading on Wall Street – technically brought the stock market into “correction” territory, a term used when a market falls 10 per cent from its recent peak.
The development is likely to be particularly unwelcome at the White House, where President Donald Trump has made much of stock-market gains under his presidency.
The broad-based sell-off marked a return to the volatility that engulfed global markets earlier this week, and indicated concerns about the strength of the US economy and the outlook for inflation.
Fresh economic figures on Thursday showed that the number of Americans filing for unemployment benefits hit a 45-year low – a sign that the US economy is storming ahead but is also at risk of over-heating.
The market rout also came amid continuing negotiations involving lawmakers on Capitol Hill as they sought to avoid another government shutdown which was due to kick in at midnight on Thursday. While a two-year budget solution negotiated by the US Senate may keep the government open, it pencils in $300 billion in extra spending over the next two years. That proposed increase in the US debt and deficit is concerning some analysts.
Thursday’s losses began to accelerate in afternoon trading, with the Dow Jones slipping 1,032 points into the red – a 4.2 per cent drop – while the S&P and tech-heavy Nasdaq index both lost more than 3 per cent. Trading volumes on Wall Street were 50 per cent above normal.
The volatility on Wall Street weighed on European trading, with European shares retreating in the final hour of trading. The pan-European Stoxx 600 index, a gauge of stocks across Europe, ended 1.8 per cent lower despite having a relatively strong start.
Ireland’s benchmark Iseq overall index followed suit and ended lower by 1.58 per cent with Glenveagh down 2.5 per cent and CRH down 3.06 per cent.
It was a similar picture across Europe. The FTSE index closed down 1.48 per cent at 7,170.69 points.Tags: Business, Capitol Hill, CRH, Dow Jones, Europe, Frankfurt am Main, Ireland, Markets, Paris(FR), United States, wall street