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Wall Street drops again, but tech bounce helps limit losses

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Reuters
Last Updated : Oct 11 2018 | 11:25 PM IST

By Shreyashi Sanyal

(Reuters) - Wall Street dropped on Thursday but the losses were less severe than the brutal sell-off in the previous session as a bounce in technology stocks helped limit losses.

Nine of the 11 S&P major sectors were lower, led by energy and health stocks. Technology companies, which led the sell-off on Wednesday, managed to post slight gains.

The stock market is caught amidst a storm of worries ranging from the impact of trade tensions on corporate profits to Treasury yields at multi-year highs and, more recently, Hurricane Michael making landfall in Florida.

While stocks had coped well with rising trade tensions between the United States and China over the past few months, the sharp rise in bond yields earlier this month, accompanied by hawkish comments from Federal Reserve officials, proved to be a tipping point that triggered the sell-off on Wall Street.

A smaller-than-anticipated rise in consumer prices, which eased some fears of inflation pressures rising, helped stocks take a bit of a breather around the open, but the slide soon resumed.

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"Nobody is talking about inflation anymore because they are just shell-shocked from what happened yesterday," said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

"Investors are just wary about the markets right now and no one is willing to stick their neck out after yesterday. At this point of time it's risk selling across the board."

Still, the high-growth technology sector was up 0.4 percent, coming off a 4.8 percent slide on Wednesday. Gains were led by Microsoft, up 1.9 percent.

"The growth stocks, which are the path leaders, typically bounce from the bottom first," said Tom Plumb, portfolio manager of the Plumb Balanced Fund in Wisconsin.

At 12:07 p.m. ET, the Dow Jones Industrial Average was down 137.02 points, or 0.54 percent, at 25,461.72, the S&P 500 was down 17.76 points, or 0.64 percent, at 2,767.92 and the Nasdaq Composite was down 2.25 points, or 0.03 percent, at 7,419.80.

Energy stocks fell 1.77 percent as oil prices hit two-week lows after an industry report showed U.S. crude inventories rose more than expected. [O/R]

The defensive utilities and real estate sectors were both down more than 1 percent, as were the health and financial sectors.

J.P.Morgan, Citigroup and Wells Fargo, which report quarterly results on Friday, were between 0.2 percent and 1.7 percent lower.

The bright spots included Delta Air Lines, which rose 3.7 percent after it forecast returning to margin growth next year and posted a better-than-estimated quarterly profit on strong demand and tight cost controls.

Declining issues outnumbered advancers for a 2.00-to-1 ratio on the NYSE and a 1.28-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 47 new lows, while the Nasdaq recorded five new highs and 206 new lows.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Saumyadeb Chakrabarty)

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First Published: Oct 11 2018 | 11:12 PM IST

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