U.S. stocks claw back from an early plunge with boost from report of slower rate hikes

U.S. stocks clawed most of their way back from a deep slide Thursday that at one point had wiped out the market’s gains for the year.

An early plunge briefly knocked more than 700 points off the Dow Jones Industrial Average as the arrest of a senior Chinese technology executive threatened to cause another flare-up in tensions between Washington and Beijing.

The sell-off eased by late afternoon, however, after the Wall Street Journal reported that the Federal Reserve is considering breaking with its current approach of steady interest rate hikes, favouring a wait-and-see approach. That was relief to investors worried that the Fed might raise interest rates too fast, which could choke off economic growth.

“The Fed is trying to, in essence, come out and make it clear they are not on a rigid schedule of rate hikes next year,” said Quincy Krosby, chief market strategist at Prudential Financial.

The S&P 500 index fell 4.11 points, or 0.2 per cent, to 2,695.95. The benchmark index had been down as much as 2.9 per cent.

The Dow dropped 79.40 points, or 0.3 per cent, to 24,947.67. The average briefly slumped as much as 784 points.

Canada’s main stock exchange, the S&P/TSX composite index fell 245.64, or 1.62 per cent) to 14,937.00.

The technology-heavy Nasdaq composite reversed an early loss to finish with a gain, adding 29.83 points, or 0.4 per  cent, to 7,188.26.

Traders move to bonds

Traders continued to shovel money into bonds, a signal that they see weakness in the economy ahead. The yield on the 10-year Treasury note fell to 2.89 per cent from 2.92 per cent on Tuesday, a large move.

U.S. stock and bond trading were closed Wednesday because of a national day of mourning for former president George H.W. Bush.

Losses in banks and energy and industrial stocks

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