After strong downturns at the end of last week, Wall Street started Monday trading session with decreases, as U.S. government bond yields and inflation are accelerating, suggesting that the Federal Reserve will raise interest rates faster than expected. As investors can get better rates of return on bonds, they pull money out of stocks.
Low interest rates that have most recently powered the stock market and economy may be ending as both the economy and job market gain strength.
A bear market happens when stocks decline over a prolonged period, with the same 20 percent threshold.
US equities extended their losses in a week overtaken by wild swings in the stock market.
Market professionals have been predicting a pullback for some time, noting that declines of 10% or more are common during bull markets.
On Wall Street, all but two S&P 500 index sectors ended higher, with economically sensitive materials, technology and consumer discretionary indexes posting the biggest gains.
Elsewhere in the region, Japan's Nikkei 225 index closed down 4.7 percent, while Hong Kong's Hang Seng dropped 4.5 percent and South Korea's Kospi index gave up 2.6 percent.
'The sell-off in the last few days is likely to reverse the trend, and potentially accelerate it further, particularly if investors start to unwind it over concerns that we could fall further, which seems likely if events in Asia this morning are any guide'.
After hitting a record high of 26,617 on January 26, the Dow closed below 24,000 Thursday for the first time since November.
While traders dumped everything from energy to finance and tech stocks, the U.S. president, Donald Trump, said nothing. It can also send bond yields higher, which makes it more expensive for individuals, companies and even the US government to borrow money. But that trade has turned bad amid wild price swings that have turned suddenly violent since the market's peak. The so-called fear gauge tracks traders' expectations for future instability and moves opposite the S&P 500 most of the time. "And what's interesting about this is it's primarily been driven by positive economic results, but that positivity has driven a likelihood for wage increases, which triggers concerns of inflation".
The Dow finished down 4.6 percent at 24,345.75.
"Well, the President, like the rest of the White House, is concerned about long-term economic indicators", Shah told reporters.
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The pan-European FTSEurofirst 300 index rose 2.02 percent and MSCI's gauge of stocks across the globe gained 0.06 percent. If the S&P 500 declines 7% in any trading day, all trading on the New York Stock Exchange is halted for 15 minutes.
US, European stocks up sharply, oil prices fall
A 3 per cent yield is looked upon by investors as a motive for people to flee the risk of stocks for the relative safety of bonds. Earlier European shares closed up 2.0 percent, snapping a seven-day losing streak, while a world stock index was up slightly.
How major US stock indexes fared on Wednesday
Nine of the 11 major S&P sectors were lower, with the industrials index's 0.57 per cent fall in early trade leading the decliners. The market began falling in the first few minutes of trading, and the pace of the declines worsened as the day wore on.
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Dow Jones makes historic fall amid record growth
The Standard & Poor's 500 index, the benchmark most professional investors and many index funds use, dropped 4.1%, to 2,648.94. It was a similar story in France and the United Kingdom , whose indices opened 3 and 2.5 percent lower respectively.