US close: Dow Jones closes more than 800 points lower as higher bond yields spook investors
US stocks got battered on Wednesday as concerns over bond markets and a struggling technology sector sunk the Dow more than 800 points, led the S&P 500 towards its longest losing streak in two years and caused the Nasdaq to record its biggest drop so far this year.
At the close, the Dow Jones was 3.15% weaker at 25,598.74, while the S&P 500 had crashed 3.29% throughout the session to 2,785.68 and the Nasdaq ended the day 4.08% softer at 7,422.05.
Market participants were shaken up by rising bond yields, which had eased slightly to 3.174% by the end of the day. However, as a result of the earlier increases, investors sold off equities in all sectors, leading to a market rout across the board.
Elsewhere, trade relations between the US and China were also on investors' minds again after US Treasury Secretary Steven Mnuchin renewed a warning to China not to engage in competitive currency devaluation.
Neil Wilson, chief market analyst at Markets.com, said: "As previously argued there is a risk that a full-blown trade conflict leads naturally to a currency war as countries affected by tariffs devalue to remain competitive. Currency and trade are just two sides of the same coin. Without the firepower on trade, China’s chief weapon is its currency and it is no surprise if it were to utilise this."
In corporate news, fastener and tools distributor Fastenal fell 7.14% during the session despite posting better-than-expected third-quarter profit and sales.
Elsewhere, generic pharmaceuticals group Akorn dipped 0.62% despite receiving approval from the FDA for its bimatroprost ophthalmic solution.
US-listed shares of Chinese electric car maker Nio closed 4.87% higher as it emerged that the second-biggest shareholder of Tesla - Baillie Gifford - has taken an 11.4% stake in the company.
Sears Holdings closed out the day's trading more than 16% lower after the Wall Street Journal reported that it had hired advisers to prepare a bankruptcy filing.
Footwear retailer DSW lost 12.81% throughout the day after it and Authentic Brands agreed to buy the Camuto Group for about $375m.
GE shares took a 1.99% hit after a Chinese intelligence operative detained in Belgium was extradited to the US to face charges that he conspired to steal trade secrets from the multinational's aviation wing.
On the data front, US wholesale price inflation slowed last month as goods prices dipped, but were steady at the 'core' level, although some economists believed that the latter might be peaking.
So-called total final demand prices rose by 0.2% month-on-month in September, according to the Department of Labor, but the year-on-year rate of change slowed from 2.8% in August to 2.6% for September.
Economists were anticipating a rise in headline producer prices of 0.2% versus the prior month and of 2.7% against the same month one year ago.
Good prices dipped by 0.1% on the month, Labor said, with food costs down by 0.6% and those for energy declining by 0.8%.
Looking ahead to Thursday, all eyes will be on the latest reading on US consumer prices referencing the month of September.
In the wake of the recent run-up in government bond yields, traders may prove more sensitive than usual to any overshoot in inflation vis-a-vis market expectations.
The consensus forecast from economists is for a slowdown in the rate of advance in headline CPI from a year-on-year clip of 2.7% for August to a 2.4% pace in September, but for the 'core' rate to pick-up from 2.2% to 2.3%.