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Dow Jones industrials sink 500 points

05 February 2018

The Toronto Stock Exchange'sS&P/TSX composite index unofficially closed down 254.89 points, or 1.61 percent, at 15,606.03, its biggest drop since May.

NPR's Jim Zarroli reports that the wage gains have investors wondering "are we going too fast?"

The Nasdaq fell 108 points, or 1.5 percent, to 7,278. "Even though you have seen rates move up some here, they are still very low, inflation is still low", he said.

Analysts have been eyeing a recent increase in United States bond yields that accelerated further on Friday following the jobs data. "Rates have risen fairly quickly this year and the speed of the advance is worrying". The Nasdaq slid 136 points, or 1.9 percent, to 7,246.

The S&P 500, which many index funds track, last month soared 5.6 percent, its biggest monthly gain since March 2016.

O'Hare said disappointing earnings added to the selling momentum.

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Among the stocks in the Dow, Apple fell 4.3 percent Friday, Exxon Mobil lost 5.1 percent, Chevron was down almost 6 percent and Goldman Sachs dropped 4.5 percent. Brent crude, used to price global oils, fell 68 cents, or 1 percent, to $68.97 per barrel in London. The e-commerce giant rose 2.9 per cent after its fourth-quarter profit increased by more than $1 billion.

The S&P 500 Index fell 1.8 percent at 2:28 p.m.in NY.

All of the index's 10 main groups were in negative territory. Natural gas slipped 1 cent to $2.85 per 1,000 cubic feet. The rate was at 2.41 percent four weeks ago and 2.66 percent on Monday.

Gold futures and copper prices both decline.

Volume on US exchanges was 5.39 billion shares, compared to the 7.33 billion average for the full session over the last 20 trading days.

Strong jobs data that increased the likelihood the Federal Reserve will lift rates next month sent bond bulls scurrying and rattled equity investors who haven't seen a week this bad in two years.

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The yield on the 10-year Treasury note - a widely used gauge for overall interest rates - rose to more than 2.8 per cent, the highest level since early 2014.

The sharp decline in stocks this week short-circuited a robust start to the year that was spurred by strong global economic growth, solid company earnings and lingering enthusiasm for the GOP tax overhaul.

Good news for workers is viewed as not-so-good news for stocks, as it suggests the economy is in danger of overheating. The market, which is down about 4% from its recent peak, hasn't suffered a 10% drop, or "correction", since February 2016.

The pan-European FTSEurofirst 300 index of leading regional shares lost 0.98 per cent and the STOXX 600 index tumbled 1.07 per cent. The Japanese yen weakened 0.87 per cent versus the greenback at 110.37 per dollar.

The down day came after the government reported that USA job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment. USA government bond yields, which rise as prices fall, hit the highest level since January 2014.

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Dow Jones industrials sink 500 points