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Stock market plunges again, enters 1st correction in 2 years

  • Trader Robert Charmak, left, works on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018. U.S. stocks are lower Thursday morning as losses from the previous day continue. (AP Photo/Richard Drew) Richard Drew

  • Traders Peter Tuchman, left, and Patrick Casey work on the floor of the New York Stock Exchange, Thursday. ap photo

  • Traders Tommy Kalikas, center, and Timothy Nick work on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018. U.S. stocks are lower Thursday morning as losses from the previous day continue. (AP Photo/Richard Drew) Richard Drew

  • Trader Jonathan Corpina, center, works on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018. U.S. stocks are lower Thursday morning as losses from the previous day continue. (AP Photo/Richard Drew) Richard Drew

  • Trader Fred DeMarco, center, and specialist Anthony Rinaldi, right, work on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018. U.S. stocks are lower Thursday morning as losses from the previous day continue. (AP Photo/Richard Drew) Richard Drew

  • Trader Michael Milano, right, works on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018. U.S. stocks are lower Thursday morning as losses from the previous day continue. (AP Photo/Richard Drew) Richard Drew

  • Trader Anthony Carannante, left, works on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018. U.S. stocks are lower Thursday morning as losses from the previous day continue. (AP Photo/Richard Drew) Richard Drew



Associated Press
Thursday, February 08, 2018

NEW YORK — The Dow Jones industrials plunged more than 1,000 points Thursday, deepening a weeklong sell-off and dragging the stock market into an official “correction” for the first time in two years as fearful investors sought to get out before their losses mounted.

The rout marked a stark turnabout in investors’ mood from just two weeks ago, when indexes set their latest record highs. Since then, the Dow and the Standard & Poor’s 500 have fallen 10 percent, Wall Street’s traditional definition of a correction.

The market began falling in the first few minutes of trading, and the pace of the declines worsened as the day wore on. Many of the companies that rose the most over the last year have borne the brunt of the selling. Facebook and Boeing have both fallen sharply.

A hint of rising inflation and interest rates last week was all it took to set off a cascade of investor angst.

After huge gains in the first weeks of this year, stocks started to tumble last Friday after the Labor Department said workers’ wages grew at a fast rate in January.

That’s good for the economy, but investors worried that it could hurt corporate profits and foreshadow faster inflation. Rising inflation could prompt the Federal Reserve to raise interest rates faster, which would act as a brake on the economy. Inflation could also send bond yields higher, making which makes it more expensive for individuals, companies and even the U.S. government to borrow money.

The Dow Jones industrial average lost 1,032.89 points, or 4.1 percent, to 23,860.46. Boeing, Goldman Sachs and Home Depot took some of the worst losses.

The S&P 500, the benchmark for many index funds, shed 100.66 points, or 3.8 percent, to 2,581. Even after this week’s losses, the S&P 500 index is up 12.5 percent over the past year. The Nasdaq composite fell 274.82 points, or 3.9 percent, to 6,777.16.

Corrections are seen as entirely normal occurrences, and the market, currently in its second-longest bull run of all time, has not seen one in two years, an unusually long time. Many market watchers have been predicting a pullback for some time, saying stock prices had become too expensive relative to company earnings.

Stocks are not falling because investors have doubts about the economy. Employers are hiring at a healthy pace, with unemployment at a 17-year low of 4.1 percent. The housing industry is solid. Manufacturing is rebounding. Households and businesses are spending freely. Personal debt has lightened since the financial crisis a decade ago. And major economies around the world are growing in tandem for the first time since the Great Recession.

“If you put $100 into the market at the Jan. 26 peak, you’d still have $90,” said Greg McBride, chief financial analyst for Bankrate.com. “This is just some healthy, and overdue, volatility to wring out any excess.”