Specialist Meric Greenbaum works at his post on the floor of the New York Stock Exchange on Oct. 10. Stocks are extending their slump on Wall Street, led by drops in big technology companies, as rising bond yields draw investors out of stocks. (Richard Drew/AP) October 10 at 9:50 PM
The U.S. stock market went nuts on Wednesday.
The Dow Jones Industrial Average was down 3.1 percent, or 832 points. It was the third-worst point decline in history.
The Standard & Poor’s 500-stock index was down 3.3 percent, its longest losing streak in two years.
The Nasdaq dropped 4.1 percent.
What’s fueling these drops?
Investors are worried about rising interest rates following Federal Reserve rate increases.
“Higher rates tend to moderate economic growth and make borrowing more expensive for the U.S. government as well as businesses and consumers,” reported The Washington Post’s Taylor Telford.
Mortgage rates reached 5 percent on Wednesday, the first time since 2011.
And the average credit card rate spiked to an all-time high of 17.07 percent, according to CreditCards.com.
“Among the 100 cards that CreditCards.com evaluates each week, 61 have increased rates in tandem with the Fed,” reported Kelly Dilworth for CreditCards.com.
Things also went crazy because the stock market has long been overdue for a correction, experts have been warning.
Steve Goldberg, an investment adviser in the District, said investors have been spoiled.
“It’s been almost 10 years since the last bear market, and most people have forgotten just how devastating bear markets can be,” he wrote for Kiplinger this week. “The 2007-09 bear market saw the S&P 500 plunge 55.3 percent — the biggest loss since the Great Depression.”
Goldberg offers some advice