Stock market swing: Dow up 330 points, TSX down 31

Stock market swing: Dow up 330 points, TSX down 31

Stock market swing: Dow up 330 points, TSX down 31

Feb 9 (Reuters) - Wall Street's three main indexes rose more than 1 percent on Friday, bouncing back from a steep selloff this week that pushed the Dow Jones Industrial Average and the S&P 500 into correction territory.

Earlier, the Dow Jones Industrial Average fell by more than 1,000 points for the second time this week.

North American markets largely pushed higher Friday after a choppy session, capping off a tumultuous period that has seen Canada's main stock index drop more than five per cent since last week and eight per cent from its all-time high.

Asian stocks are coming under heavy selling pressure, with benchmark indexes in China, Hong Kong, Japan and South Korea losing 2-5 percent, as the downtrend in oil prices added to worries over higher US bond yields.

Markets followed US stocks lower after the Dow, coming off a record high, entered a "correction" - that is, a 10 percent decline from its latest peak - for the first time in two years.

The S&P 500 shed 58 points, or 2.2 percent, to 2,620 as of 1 p.m.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.86 percent from 2.83 percent.

The Dow was up 264 points, or 1.1 percent, at 24,122.

Investors anxious that rising wages will hurt corporate profits and could signal an increase in inflation that could prompt the Federal Reserve to raise interest rates at a faster pace, putting a brake on the economy.

After hitting a high two weeks ago, US stocks started to tumble last week after the Labor Department said workers' wages grew at a fast rate in January.

Financial analysts regard corrections as a normal market event but say the unusually abrupt plunge might have been triggered by a combination of events that rattled investors. Those include worries about a potential rise in USA inflation or interest rates and whether budget disputes in Washington might lead to another government shutdown. Britain's FTSE 100 fell 1.5 percent. President Donald Trump on Friday signed a $400 billion budget deal that sharply boosts spending and swells the federal deficit, ending a brief federal government shutdown. Facebook and Boeing have both fallen sharply. Even with the rebound, this was the worst week for the market in about two years.

Fidelity International's chief investment officer for Japan, Takashi Maruyama, said the "massive volatility" was a reaction to the rapid rise on the Japanese market since previous year.

Moreover, notwithstanding a few tremors, the U.S. and European stock markets have been rising solidly since 2009, making this one of the longest bull runs in history. Many market watchers have been predicting a pullback, saying stock prices have become too expensive relative to company earnings.

"We may have seen the worst, but it's too early to say for sure". It's still up 15 percent over the past year.

The bank left interest rates at 0.5% at its meeting, but said a strengthening economy meant interest rates were likely to rise sooner than the markets were expecting.

At the same time, higher interest rates can make investment alternatives to stocks, such as bonds, more attractive.

The S&P500, the most meaningful United States stock index, went through the entire year without falling by 3% or more in one session - something that had only happened once in its 94-year history.

When volatility reasserted itself, that was always going to lead to some violent sell-offs, particularly in view of the fact that interest rates have been at close to zero in most advanced economies for the best part of a decade, meaning some investors have been moving in to riskier assets in search of yield. It could prompt the Federal Reserve to raise interest rates at a faster pace, which would act as a brake on the economy.

In currency markets, the dollar edged up to 108.84 yen from Thursday's 108.73 yen. GrubHub jumped $21.44, or 30.7 percent, to $91.34, while Yum Brands dipped $1.22, or 1.5 percent, to $78.91. Brent crude, used to price worldwide oils, slid $2.78, or 4.3 percent, to $62.03 in London.