S&P 500, Dow on track for worst week in two years

S&P 500, Dow on track for worst week in two years

S&P 500, Dow on track for worst week in two years

- Emerging market stocks lost 1.6 percent, for a weekly drop of 3.5 percent, the most since May 2016.

US stocks closed sharply lower Friday, handing the Standard & Poor's 500 index its worst week in two years and sending the Dow Jones industrial average down more than 650 points.

Rising bond yields are traditionally seen as bad for stocks as it means large companies will have to spend more to finance their debts as interest rates increase.

As of 3 p.m., the Dow had lost nearly 650 points, or more than 2%, with weak earnings reported from several American business behemoths, including Exxon Mobil and Google's parent company Alphabet.

The fall came after a string of disappointing earnings reports from giants such as Apple.

Stocks hit a rut this week after coming out of the gates strong in 2018. The Dow and the Nasdaq have climbed more than 40% apiece since the 2016 election.

The downturn also followed a long period of unprecedented calm in the market.

Others have said US stocks were rising mostly on the economic growth that's been seen worldwide in the last two years, which also had sent foreign stocks higher.

Sony, which recently posted stellar quarterly earnings, especially in its entertainment division, was the only major media conglomerate to trade higher on Friday, closing up 6 percent.

The Dow Jones Small-Cap Growth TSM Index closed at 9,598.09 for a loss of -195.51 points or -2.00%. The Standard & Poor's 500 index gave up 49 points, or 1.8 percent, to 2,773.

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"The pace of rate increases is more important than the level", said Nate Thooft, senior portfolio manager at Manulife Asset Management.

The increase in rates has been driven by the prospect of stronger economic growth, and higher inflation, in the U.S. and overseas.

Analysts have been eyeing a recent increase in U.S. bond yields that accelerated further on Friday following the jobs data.

Yields on the 10-year U.S. Treasury note shot up to a four-year high within five minutes of release of the Labor Department's unemployment report for January.

The decline sent the Dow below the psychologically important level of 26,000, which it had just broken through for the first time two-and-a-half weeks ago. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017.

For the week, the Dow fell 4%, while the Nasdaq and S&P 500 each slipped by more than 3%.

But investors sold off Friday on fears that a stronger-than-expected jobs report would spur the Federal Reserve to raise interest rates more than expected. The government's latest job and wage data stoked those concerns Friday.

Figures from the USA job market on Friday showed wages rising at the fastest annual rate since 2009, as the American economy created 200,000 new jobs last month - a better performance than had been expected by economists.

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