Selling pressure continued to sweep across European and US equity markets as worries about an environment of higher interest rates fueled a 400+ point drop in the Dow Jones Industrial Average, the blue chip index's worst day in more than three months. The feeding frenzy in the tech sector continued Wednesday leaving the Nasdaq more than 2% lower and flirting with support at its 200-day moving average for the first time since February.
The persistent rise in the 10-year yield finally translated into higher consumer interest rates as the 30-year mortgage rate broke the 5% mark for the first time in eight years. Fearful that higher borrowing costs for consumers and businesses will cause the economy to stall, investors were bailing out of interest rate sensitive sectors, namely those with high capital needs. Accordingly, the small cap Russell 2000 was lower for a fifth straight day and at its lowest level in five months.
The defensive tone was amplified by the fallout from the US/China trade war after luxury brand Louis Vuitton Moet Hennessy (LVMH) warned of slowing demand for luxury goods in China. The news reverberated through the sector with shares of Michael Kors ( KORS ), Tiffany ( TIF ) and Ralph Lauren ( RL ) all trading significantly lower.
Early losses accelerated following the release of wholesale price data. The producer price index increased an as-expected 0.2% in September, bouncing back from a 0.1% decline the month prior. Excluding food and fuel, the producer price index was also up 0.2%.
In other economic news, wholesale inventories swelled 1.0% in August from a preliminary +0.8%. Wholesale sales were up 0.8%.
The sea of red spread across Europe as well with luxury names and automakers taking the brunt of Wednesday's feeding frenzy. Germany's DAX lost almost 2% in value on losses in Adidas, German utility RWE AG and internet provider Wirecard. On France's CAC-40, Hermes, LVMH and Kering are all deep into negative territory making the French index the worst performing EU market indicator.
Crude oil was down $1.54 to $73.42 per barrel. Natural gas was up $0.01 to $3.28 per 1 million BTU. Gold was up $0.90 to $1,192.40 an ounce, while silver was down $0.08 to $14.32 an ounce. Copper was down $0.02 to $2.78 per pound.
Among energy ETFs, the United States Oil Fund was down 2.28% to $15.46 with the United States Natural Gas Fund down 0.10% to $27.02. Among precious-metal funds, the Market Vectors Gold Miners ETF was up 0.13% to 18.42 while SPDR Gold Shares were down 0.06% to $112.53. The iShares Silver Trust was down 0.63% to $13.44.
Here's where the markets stand at mid-day:
NYSE Composite Index was down 130.59 points (-1.00%) to 12,830.44
Dow Jones Industrial Index was down 372.39 points (-1.41%) to 26,058.18
S&P 500 was down 35.93 points (-1.25%) to 2,844.37
Nasdaq Composite Index was down 156.54 points (-2.03%) to 7,581.19
FTSE 100 was down 81.54 points (-1.13%) to 7,156.05
DAX was down 228.85 points (-1.91%) to 11,748.37
CAC 40 was down 104.75 points (-1.97%) to 5,213.80
Nikkei 225 was up 36.65 points (+0.16%) to 23,506.04
Hang Seng Index was up 20.16 points (+0.08%) to 26,193.07
Shanghai China Composite Index was up 4.82 points (+0.18%) to 2,725.84
NYSE SECTOR INDICES
NYSE Energy Sector Index was down 251.33 points (-2.03%) to 12,143.45
NYSE Financial Sector Index was down 74.44 points (-0.94%) to 7,894.97
NYSE Healthcare Sector Index was down 69.46 points (-0.43%) to 16,116.88
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