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The Dow Jones Industrial Average sank another 600 points today as a renewed rise in U.S. bond yields and fears of higher inflation unnerved investors still piecing over a historic drop earlier this week.
The 10-year U.S. Treasury yield rose to a high of 2.884 per cent in morning trading, nearing Monday’s four-year peak of 2.885 per cent after the Bank of England said interest rates probably need to rise sooner than previously expected.
“Things haven’t quietened down. Things are all over the place. The market is trying to find a bottom to this madness,” said Jason Ware, chief investment officer at Albion Financial Group.
“Now we are having acute attention on what happens in the bond markets, so when yields move up, there is an unsettling feeling in the equity market.”
The market’s main gauge of volatility, the CBOE Volatility Index, fell to 29.82 on Thursday, more than twice what it was a week ago, but down from a 2½-year high of above 50 points Tuesday.
Investors are still weighing whether the sharp swings this week could lead to a correction or just a temporary bump in the nine-year bull market, spurred by concerns over rising interest rates and bond yields.
On Bay Street, the S&P/TSX composite index was off by 179.75 points or, 1.17 per cent, at 15,150.83.
The Canadian dollar dipped 0.12 of a cent to 79.46 cents US in foreign-exchange trading.
By 1:10 p.m. ET, the Dow Jones Industrial Average was down 662 points, or 2.7 per cent, at 24,231.37, the S&P 500 was down 61.17 points, or 2.3 per cent, at 2,620.49.
The Nasdaq Composite stood at 6,904.59 after shedding 147.40, or 2.09 per cent..
Nine of the 11 major S&P sectors were lower, with the financial, consumer discretionary and industrials leading the decliners.