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BUSINESS Saturday 3 February 2018
A25

U.S. stocks swoon, sending Dow down more than 650 points

By ALEX VEIGA The Dow lost 665.75 points,
AP Business Writer or 2.5 percent, to 25,520.96.
U.S. stocks slumped Friday, The Nasdaq slid 144.92
and the market suffered its points, or 2 percent, to
worst week in two years, as 7,240.95. The Russell 2000
fears of inflation and disap- index of smaller-compa-
pointing quarterly results ny stocks gave up 32.59
from technology and en- points, or 2.1 percent, to
ergy giants spooked inves- 1,547.27.
tors. The Dow Jones indus- While interest rates are
trial average dropped by still low by historical stan-
more than 650 points. dards, meaning borrow-
Bond yields rose and con- ing is still relatively cheap
tributed to the stock mar- for businesses and people,
ket swoon after the govern- they’ve been rising more
ment reported that wages swiftly, and that’s what has
grew last month at the fast- markets on edge.
est pace in eight years. The “The pace of rate increas-
Dow had its worst decline es is more important than
since June 2016, while the the level,” said Nate Thooft,
broader Standard & Poor’s senior portfolio manager at
500 index had its biggest Manulife Asset Manage-
one-day percentage drop ment.
since September 2016. The increase in rates has Trader Peter Tuchman works on the floor of the New York Stock Exchange, Friday, Feb. 2, 2018.
“We’ve enjoyed low inter- been driven by the pros- Technology companies were leading stocks broadly lower in early trading, extending the market’s
slide into a second day.
est rates for so long, we’re pect of stronger economic Associated Press
having to deal with a little growth, and higher infla-
bit higher rates now, so the tion, in the U.S. and abroad.
out what that could mean Friday, pushing yields high- Yellen lands new job
market is trying to figure Bond prices declined again
for inflation,” said Darrell er. The yield on the 10-year
mark for interest rates on at Brookings Institution
Cronk, head of the Wells Treasury note, a bench-
Fargo Investment Institute.
The increase in bond yields many kinds of loans, includ-
hurts stocks in two ways: it ing mortgages, climbed to President Donald Trump,
makes it more expensive 2.84 percent, the highest who praised Yellen’s perfor-
for companies to borrow level in roughly four years. mance, decided against
money, and it also makes The rate was at 2.41 per- offering her a second term
bonds more appealing to cent four weeks ago and and instead tapped Fed
investors than riskier assets 2.66 percent on Monday. board member Jerome
such as stocks. “Once we started going Powell. Powell will be sworn
Several major companies, north of 2.5 percent, and in Monday.
including Exxon Mobil and you put that together with Hundreds of Fed staffers
Google’s parent compa- an overbought market, it gathered Thursday to cel-
ny, Alphabet, sank after re- had the ingredients of a ebrate Yellen’s Fed ten-
porting weak earnings. Ap- sell-off, especially since ure, welcoming her with
ple fell on concerns about January was so strong,” prolonged applause when
iPhone sales. said Jeff Zipper, regional she appeared in the Fed’s
The sharp decline in stocks investment strategist at U.S. giant atrium, according
this week short-circuited a Bank Private Wealth Man- to participants at the staff
robust start to the year that agement. In this Tuesday, Nov. 7, 2017, file photo, former Federal Reserve gathering. Yellen told the
Chair Ben Bernanke, left, and Federal Reserve Chair Janet
was spurred by strong glob- The S&P 500, which many Yellen attend a ceremony awarding them both with the Paul staff that they would be in
al economic growth, solid index funds track, soared H. Douglas Award for Ethics in Government, on Capitol Hill in good hands under Powell’s
company earnings and lin- 5.6 percent in January, its Washington. leadership.
gering enthusiasm for the biggest monthly gain since Associated Press In his remarks, Powell
GOP tax overhaul. Even March 2016. By MARTIN CRUTSINGER and Monetary Policy as a praised Yellen as the most
with the pullback, the ma- U.S. employers added a AP Economics Writer distinguished fellow in resi- qualified person to hold the
jor indexes are still up more robust 200,000 jobs in Janu- WASHINGTON (AP) — Fed- dence. job of Fed chair in the cen-
than 3 percent this year. ary, slightly above market eral Reserve Chair Janet One of her colleagues will tral bank’s history.
The downturn also follows expectations for an 185,000 Yellen, the first woman to be her predecessor, former Powell, who has served on
a long period of unprece- increase. head the nation’s cen- Chairman Ben Bernanke, the Fed board with Yellen
dented calm in the market. Meanwhile wages rose tral bank, got a boisterous who joined Brookings in since 2012, ended his re-
Stocks haven’t had a pull- sharply, suggesting em- send-off from Fed staff, but 2014 when he stepped marks by popping the col-
back of 10 percent or more ployers are competing she isn’t taking any time down from the Fed. lar of his suit jacket.
in two years, and hit their more fiercely for work- off. After her last day at the In a tweet Friday, Bernanke He joined other Fed staff-
latest record highs just one ers. The figures point to an Fed on Friday, she will start said, “I congratulate Janet ers and others online have
week ago. economy on strong footing a new job Monday at the on her outstanding public used the #PopYourCollar
The S&P 500 fell 59.85 points, even in its ninth year of ex- Brookings Institution. service and look forward to hashtag on social media
or 2.1 percent, to 2,762.13. pansion, fueled by global The Washington think tank being her colleague at the in recent days in tribute to
The index has lost 3.9 per- economic growth and announced that Yellen will Brookings Institution.” Yellen’s trademark ward-
cent since hitting a record healthy consumer spend- be joining the institution’s Yellen is leaving after one robe style of wearing her
high a week ago. ing at home.q Hutchins Center on Fiscal term as Fed chair. collars turned up.q