2-6-18 4:29 AM EST | Email Article

By Sara Sjolin, MarketWatch

Dow Jones Industrial Average suffered biggest point drop ever

U.K. stocks dropped and headed for their lowest close in almost 10 months on Tuesday, tracking a selloff in the U.S. where stocks fell by the most in more than six years.

What are markets doing?

The FTSE 100 index fell 1.6% to 7,218.50, setting it on track for its lowest close since April 2017, according to FactSet data. The index traded as low as 7.079.41 -- a 3.5% decline -- but started to trim losses as U.S. stock futures swung into positive territory.

The pound rose to $1.3991 from $1.3954 late Monday in New York.

What is driving the market?

Stocks in the U.K. and Europe tumbled on Tuesday morning following a bloodbath on Wall Street on Monday, when the Dow Jones Industrial Average suffered its biggest one-day point drop ever (http://www.marketwatch.com/story/us-stocks-poised-for-fresh-selloff-as-dow-futures-slide-120-points-2018-02-05) and ended 4.6% lower for the day.

The selloff came as rising bond yields and hints that U.S. inflation is rising faster than expected fueled concerns the Federal Reserve could raise interest rates more quickly than currently anticipated. Analysts also noted that stocks globally have rallied to all-time highs earlier in the year, setting the markets up for an overdue pullback.

Stocks in Asia followed suit, with Japan's Nikkei 225 index closing down (http://www.marketwatch.com/story/asian-markets-fall-hard-continuing-global-selloff-2018-02-05) 4.7%.

What are strategists saying?

"While the roots and drivers [of the selloff] are sure to be discussed for days, it looks to emanate from a perfect storm of reasons including, but not restricted to, a strong 2017 rally extending into January, low volatility, low interest rates, over-optimism and complacency, over-leverage and financial engineering, all coming to a head as investors react to the possibility of higher/faster interest rates rises with bond yields creeping higher to jeopardize the current market situation," said Mike van Dulken, head of research at Accendo Markets, in a note.

Which stocks are in focus?

Shares of BP PLC (BP.LN) dropped 1.3% after the oil giant reported its first quarterly loss since mid-2016 (http://www.marketwatch.com/story/bp-posts-first-quarterly-loss-in-more-than-a-year-2018-02-06), weighed down by one-off charges relating to the company's 2010 blowout in the Gulf of Mexico and the U.S. tax overhaul.

Hargreaves Lansdown PLC (HL.LN) fell 1.8% even after the investment manager said pretax profit rose 12% in the fiscal first half.

 

(END) Dow Jones Newswires

February 06, 2018 04:29 ET (09:29 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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