The Dow Jones Industrial Average fell 545 points after dropping 831 points Wednesday. The two-day loss of 5.3 percent is the biggest for Dow since February. The S&P 500 is also down more than 5 percent over the two days and after falling for the past six trading days is almost 7 percent below its Sept. 20 high.
The recent turbulence in financial markets is a contrast to what investors have grown accustomed to in a bull market that has lasted more than 10 years, the longest in history. A hallmark of the past decade has been ultra-low interest rates, which the Federal Reserve used to promote growth in the aftermath of the 2008 financial crisis.
The Fed has been gradually raising interest rates over the past two years, after not having increased them since the recession. Higher rates have been the catalyst for recent selling, stoking concerns that slower growth would impinge on corporate profits.
There are ongoing concerns about the unresolved trade dispute between the U.S. and China. Negative comments from company executives about future profits could have the opposite effect. Recently a larger-than-normal number of companies have warned that their third-quarter results could be weaker than analysts expected.
The benchmark S&P 500 index rose in morning trading, but ultimately gave up 57.31 points, or 2.1 percent, to 2,728.37, its lowest close in three months. The index has declined 6.7 percent during its current losing streak. That’s its steepest downturn since a 10-percent drop in early February.
The Dow Jones Industrial Average lost 545.91 points, or 2.1 percent, to 25,052.83 after falling as much as 698. The Nasdaq composite skidded 92.99 points, or 1.3 percent, to 7,329.06. The Russell 2000 index of smaller-company stocks fell 30.03 points, or 1.9 percent, to 1,545.38.
Thursday’s losses in the U.S. followed steep declines overseas. Markets in France, Britain and Germany fell after stocks declined sharply in Hong Kong and Japan.
Bond prices rose as the recent surge in yields attracted the attention of some investors. The yield on the 10-year Treasury note fell to 3.15 percent from 3.22 percent late Wednesday. That’s still sharply higher than it was about a week ago, and earlier this week the yield on the 10-year note reached its highest level since mid-2011.
The drop in yields hurt banks, and JPMorgan Chase fell 3 percent to $1078.13 while Bank of America sank 3 percent to $28.36. JPMorgan Chase and several other banks will report their third-quarter results Friday morning.
The Nasdaq composite has fallen 9.6 percent since it set a record high in late August and the Russell 2000 has fallen 11 percent.
U.S. crude dropped 3 percent while Brent crude, the international standard, dropped 3.4 percent. Wholesale gasoline, heating oil and natural gas also declined.
After months of declines, the price of gold jumped by the most in two years, rising 2.9 percent to $1,227.60 an ounce.
In other metals trading, silver rose 2 percent and copper added 0.8 percent.
The dollar fell to 111.94 yen from 112.59 yen, and the euro rose to $1.1594 from $1.1525.