Wall Street plunges as investors seek safety

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US stocks plunged to their worst loss in eight months on Wednesday as technology companies continued to drop.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy. More than a quarter of stocks on the Shanghai exchange fell by their 10 percent daily limit, according to Bloomberg, as the Shanghai Composite Index hit lows not seen since 2014. The Russell 2000 index of smaller-company stocks fell 30.03 points, or 1.9 percent, to 1,545.38. Markets in France, Britain and Germany fell after stocks declined sharply in Hong Kong and Japan.

Shares in Facebook, Amazon, Apple, Netflix and Google's parent company Alphabet - the so-called "FAANG" stocks that have driven United States markets to all-time highs recently - all fell in NY trading.

Investors were concerned that the Federal Reserve will continue to raise interest rates and that this will slow economic growth and make borrowing more expensive for the USA government, as well as businesses and consumers. On Wednesday he said he thought policy makers were "making a mistake" and said the Fed had "gone crazy".

The Nasdaq fell 99 points, or 1.3 per cent, to 7322. That will raise the cost of corporate borrowing and could drag on economic growth.

The Dow fell 831 points, or 3.1 per cent, to 25,598. The yield on the 10-year Treasury fell to 3.16 percent.

Tech is taking its lumps because bond yields have climbed in recent weeks, hovering at a more-than-seven-year high. Amazon dropped another 2% to $1,719.36 and Apple fell 0.9% to $214.45.

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Stocks are opening modestly lower on Wall Street following volatile trading in Asia and Europe.

Bets on market calm, measured by the number of contracts shorting futures for the CBOE Market Volatility Index.VIX compared to long contracts, are at a higher level than before the market correction, according to data from the U.S. Commodity Futures Trading Commission. Technology companies and retailers, including longtime market favorites Apple, Alphabet and Amazon, continue to slide. A move of more than two deviations, or 40 basis points now, leads to negative S&P 500 returns, Goldman says.

Earnings season kicks off with reports from JPMorgan Chase, Citigroup and Wells Fargo. The yield was just 2.82 percent in last August. After years of big gains, those stocks are now out of favor. The Nasdaq composite rose less than a point to 7,422.

Gold rose 0.2 per cent to $1,193.40 an ounce.

"People fear that it will be harder to snap back if we're seeing a cyclical top in earnings with those two headwinds, which are not going away", said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. Wholesale gasoline, heating oil and natural gas also declined.

The dollar fell to 111.98 yen from 112.59 yen, and the euro rose to $1.1593 from $1.1525.