USA stocks plunge toward their worst loss in six months

Dow falls 500 points as rising Treasury yields drag down market

Dow falls 500 points as rising Treasury yields drag down market

"I think equity markets are getting a little spooked that the rise in interest rates is going to impact valuations and erode, potentially, corporate profits and this is obviously coming at a time when equity valuations have been so lofty", she said in an interview.

The Dow Jones Industrial Average gave up 500 points, or 1.9 per cent to 25,926.

Following reports that Sears could file for bankruptcy protection as soon as this week, shares of the cash-strapped retailer plummeted as much as 37%. Tiffany plunged 10.2 per cent to US$110.38 and Ralph Lauren fell 8.4 per cent to US$116.96.

On Friday, federal data showed that the US jobless rate fell to 3.7 percent in September, it's lowest point since 1969. Yields on 3-year notes have recently traded just above 3.0 percent, providing long-absent competition for investment returns with equities.

Rising government bond yields have made them more attractive, leading investors to pull money out of equities.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices.

Gold stocks rose by more than two per cent on a higher price of gold. Concerns about consumer spending have also led to jitters about United States companies as they prepare to unveil results for the third quarter of the year over the coming weeks.

Tom Cahill of Ventura Wealth Management said investors were also unnerved by remarks from luxury company LVMH of a crackdown on some goods in China amid the country's bitter dispute with the United States. The energy sector was close behind with a 2.9 percent loss, as oil extraction in the Gulf of Mexico shutting down due to the hurricane.

Sears has closed hundreds of stores and sold several famous brands or put them on the block as it sees more customers abandon its stores.

USA markets mirrored risk-off sentiment around the globe, with European stocks having also ended sharply lower.

Earnings were a major driver of the market last quarter, and analysts see more robust results ahead, even if companies face growing issues like the yet-to-be-resolved trade war and higher raw-materials costs.

USA crude settled down $1.79 at $73.17 per barrel and Brent fell $1.91 to settle at $83.09.

The 10-year US Treasury yield rose to 3.23 per cent from 3.20 per cent late Tuesday after earlier touching 3.24 per cent.

Wholesale gasoline shed 2.7 percent to $2.02 a gallon. Silver dipped 0.5 percent to $14.33 an ounce. Heating oil fell 1.2 percent to $2.39 a gallon.

The S&P/NZX 50 index declined 19.16 points, or 0.2 per cent, to 9050.82.

Investors may want to shift out of momentum and into more defensive stocks - companies that aren't as expensive and also pay healthy, stable dividends. Copper fell 0.9 percent to $2.78 a pound.

There were, however, slight lifts for Japan's Nikkei, which added 0.2 per cent, and Hong Kong's Hang Seng, which gained 0.2 per cent.

The CAC 40 in France dropped 2.1 percent, Germany's DAX lost 2.2 percent and the FTSE 100 in London fell 1.3 percent. Brazil's Bovespa lost 2.5 per cent and the Merval in Argentina sank 2.2 per cent.

The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday. The euro rose to $1.1525 from $1.1496.