U.S. markets drop sharply as investors are spooked by rising rates

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Oct. 5, 2018. A severe sell-off in technology stocks has pushed the front-month VIX futures contract to a premium relative to the second-month contract. Photographer: Michael Nagle/Bloomberg (Michael Nagle/Bloomberg) October 10 at 3:40 PM

Wall Street extended its losses Wednesday afternoon as markets continued to skid, with the Nasdaq leading the losses. The Dow lost more than 700 points in afternoon trading. The Standard and Poor’s 500-stock index was approaching its longest losing streak in two years.

A surge in Treasury yields appears to be fueling the losses, as the 10-year U.S. Treasury yield spiked last month and has continued to climb throughout October, landing at 3.21 percent Wednesday.

The tech sector was hit hardest, with Netflix down nearly 7 percent, Amazon down 5 percent and Apple, Google and Facebook all down more than 3 percent.

“Clearly stocks are spooked by higher rates and maybe some inflation that seems to be creeping in,” said Michael Farr, CEO of Farr, Miller & Washington. “That suggests the Fed will keep raising rates, and that’s taking the wind out of the stocks that have done the most, particularly in the tech sector.”

The Dow Jones industrial average dropped 2.7 percent, or more than 700 points. The S&P 500 was down 2.8 percent, and the tech-heavy Nasdaq saw losses of 3.5 percent.

The yield on the 10-year U.S. Treasury note is a closely watched number as a signal of where the U.S. economy is headed. The yield — what it pays its owner for buying it — climbed above 3 percent in April. Many observers expected that would trigger a sell-off in the

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