US stocks fell more than two per cent yesterday, extending the previous day’s sharp decline as investors fretted over the Federal Reserve’s plan to begin reducing its stimulus later this year if the economy strengthens.
The S&P 500 recorded its biggest daily decline since 11 November, 2011, on the year’s heaviest day of trading. All 10 S&P sectors were sharply lower, with 94 per cent of stocks traded on the New York Stock Exchange down for the day and more than four-fifths of Nasdaq-listed shares ending lower.
The Dow Jones industrial average dived 353.87 points, or 2.34 per cent, at 14,758.32. The Standard & Poor’s 500 Index was down 40.74 points, or 2.50 per cent, at 1,588.19. The Nasdaq Composite Index dropped 78.57 points, or 2.28 per cent, at 3,364.64.
The Fed’s programme of bond-buying has fuelled stock market gains this year, sending indexes to a series of all-time highs. A trend emerged of investors buying on market dips and limiting stocks'’ decline.
David Joy, chief market strategist at Ameriprise Financial said it wasn’t clear that pattern would continue. “There’s money leaving the market from people who were convinced that the rally has been mostly attributable to the Fed, and the rise on the 10-year yield is a concern since it happened so quickly," he said.
“It’s too early to say whether this represents a buying opportunity or if the weakness will continue.” The S&P 500 index closed below its 50-day moving average for only its second time this year.
New York Report