Stocks tumbled Thursday as this week’s spike in U.S. interest rates rippled through global markets. Investors sold high-flying technology and internet stocks and the Nasdaq composite took its biggest loss in three months.
Strong reports on job gains and the service industry have sent bond prices tumbling over the last two days as traders bet the U.S. economy will keep growing at about its current clip. Government bonds are stable investments that look most appealing when economic growth is shaky, so investors sold those bonds in the U.S. and Europe.
But the big drop in bond prices is sending interest rates sharply higher, a development that worries investors because it can eventually slow economic growth by making borrowing more expensive for consumers and businesses. It also makes bonds a more intriguing investment compared to stocks.
The S&P 500 index skidded 23.90 points, or 0.8 percent, to 2,901.61. The Dow Jones Industrial Average lost 200.91 points, or 0.7 percent, to 26,627.48. The Nasdaq composite fell 145.57 points, or 1.8 percent, to 7,879.51. The Russell 2000 index of smaller-company stocks gave up 24.38 points, or 1.5 percent, to 1,646.91.
Bond prices fell again. The yield on the 10-year Treasury note climbed to 3.18 percent from 3.16 percent. Yields began climbing Wednesday following encouraging signs on hiring by private companies and growth for services companies.
The health of the economy and the pace of inflation will both be in focus Friday morning after the Labor Department makes its monthly jobs report. That will include hiring by governments and private companies in September and will also include data on wage increases. Stocks plunged in February after the report showed wages increased sharply the month before.
Alphabet, Google’s parent company, fell 2.8 percent to $1,177.07. That was its worst loss in five months. Apple slid 1.8 percent to $227.99 and Microsoft lost 2.1 percent to $112.79. Facebook shed 2.2 percent to $158.85 and Amazon declined 2.2 percent to $1,909.42.
Bank stocks have made tiny gains this year, but they climbed Thursday because higher interest rates mean they make bigger profits on mortgages and other types of loans. Bank of America added 1.2 percent to $30.37 and Wells Fargo rose 1.5 percent to $53.46.
Industrial and energy companies have both lagged the broader S&P 500 in 2018. Those stocks fell Thursday, but they did better than the rest of the market.
The same pattern played out in Europe as stocks and bond prices fell. France’s CAC 40 sank 1.5 percent and Britain’s FTSE 100 tumbled 1.2 percent. The DAX in Germany lost 0.4 percent.
Benchmark U.S. crude slid 2.7 percent to $74.33 per barrel in New York. U.S. crude hit four-year highs this week. Brent crude, used to price international oils, lost 2 percent to $84.58 per barrel in London.
Wholesale gasoline lost 1.7 percent to $2.10 a gallon. Heating oil slipped 1.5 percent to $2.40 a gallon. Natural gas fell 2 percent to $3.17 per 1,000 cubic feet.
Gold fell 0.1 percent to $1,201.60 an ounce. Silver lost 0.5 percent to $14.59 an ounce. Copper dropped 2 percent to $2.78 a pound.
The dollar fell to 113.86 yen from 114.34. The euro slipped to $1.1515 from $1.1517.