Dow Jones suffers worst decline in history

In an address at a Cincinnati-area manufacturing company yesterday afternoon, he hailed a "tidal wave of good news", while television coverage of his speech tracked a further plunge in the Dow toward minus 1,600 points in a corner of the screen.

That's the industrial average's biggest point drop of all time, and the worst percentage decline since 2011.

Here's what you need to know about what's going on with the stock market.

The selling on Wall Street has left the stock market on the verge of a "correction", which signifies a 10% retreat from a previous high.

Gold prices fell by 0.1 percent to $ 336.50 per troy ounce. The Dow is now negative for the year. The stock market sell-off of the early 1970s had earnings growth of more than 30%.

The trouble in the market began early last week, when investors focused on a number of lingering concerns. "Now with inflation indicators heading north, the Federal Reserve is expected to move more aggressively than previously thought". That's great news for Main Street.

Investors have also been nervously watching the bond market, where yields have been creeping higher. European indexes were down about 2 percent, while Japan's Nikkei lost 4.7 percent.

John Maynard Keynes said that panics were not so much the result of bad reasoning by individuals as by the way markets are organised and driven by groups of professionals trying to figure out what other professionals will do. Stocks were down about 2% in Britain, Germany and France. The S&P 500 index hit 2,716.74 at its low on Monday, representing a decline of 5.4% since its intraday peak at 2,872.87 on January 26, according to FactSet data.

Europe's main markets started down as much as 3 percent and shares tumbled in Asia after a wild day for US markets.

According to projections released in December, officials expect three rate hikes in 2018 - so long as market conditions remain broadly as they are - but some economists believe the central bank could add another increase at its final meeting of the year. Indeed, it all seemed to begin with the election of Donald Trump in November 2016. The Dow shed 1,597 points at its low and was recently off 1,092 points, or 4.3%.

Caroline Wozniacki: congrats on her first career Grand Slam!
Halep will try and play more aggressive whilst Wozniacki will keep chasing down balls and will look to keep errors to a minimum. The win returned Wozniacki to the No. 1 ranking, six years after losing it at the 2012 Australian Open .

During the worst day of the financial crisis in 2008, the market dropped by 800 points.

I keep hearing the term "circuit breaker". "The psychology of the market changed today".

How does a circuit breaker work?

The final numbers of the day are shown above the floor of the New York Stock Exchange in New York, US, February 5, 2018.

This would suggest that the markets may have risen more than they should have - animal spirits had got the best of them, as often happens. At its low for the day, during the scary period from 3 to 3:15 p.m., the S&P was down about 4.4%. After that, trading isn't halted unless the S&P drops 20% - market crash territory.

Does all of this mean we're entering a recession?

"You had a market that was overbought and ripe for something to undermine its tranquility", said Mark Luschini, chief investment strategist at Janney Capital. Unemployment is at a 17-year low, hiring is strong and growth is very solid (and expected to pick up more this year).

The yield on the 10-year Treasury bond, which in the previous couple of weeks put on more than 10 basis points, fell almost 2 bps in Asian trade on Tuesday to 2.65% as investors bought back into bonds.

Vehicle registrations in the United Kingdom slumped by 6% in January and the Markit/CIPS survey of the services sector recorded its worst level of growth for 16 months.

"We're always concerned when the market loses any value but we're also confident in the economy's fundamentals", the White House said in response to the market decline.


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