U.S. stocks have plunged more than 1,000 points for the second time this week and the stock market was now in a correction - 10 per cent off its record high just two weeks ago, the media reported. The market's main gauge of volatility, the Cboe Volatility Index .VIX , slipped 0.77 to 32.69 on Friday, about three times the average level of the past year.
"We haven't seen volatility like this certainly in the past two years", said Brad McMillan, chief investment officer at brokerage company Commonwealth Financial Network.
Meanwhile, the S&P 500 fell 3.75% to 2,581 points, also pushing it towards a 10% decline from its January high, while the Nasdaq composite was down 3.9%. "As T-bond yields increase in value, the lure becomes greater for investors to move out of volatile stocks and into bonds for a safer, near-guaranteed return".
The question now for investors, who have ridden a almost nine-year bull run, is whether this is the long-awaited pullback that paves the way for stocks to again keep rising after finding some value, or the start of a decline that leads to a bear market.
Bond prices fell. The yield on the 10-year Treasury rose to 2.85 percent from 2.83 percent late Thursday. Tokyo's Nikkei 225 lost 2.3 percent to 21,382.62 and Hong Kong's Hang Seng retreated 3.1 percent to 29,507.42. Rising yields have made bonds more appealing to some investors compared to stocks. But if inflation shows signs of accelerating, the Fed will raise rates higher and faster than now expected-which would likely kill the nine-year-old bull market.
Stocks are having another bad day on Thursday as a wild week for markets continues.
The benchmark S&P 500 was still set for a second day of declines, following sharp swings in recent sessions including its biggest drop in more than six years that pulled equities away from record highs.
Global markets fell on Friday, following the Dow's decline on Thursday.
Even the most bullish of market strategists will say a correction is ultimately healthy for a market because it removes some of the froth and speculation. Brent crude, the worldwide standard for oil prices, gave up 70 cents, or 1.1 percent, to $64.81 per barrel in London. On the Nasdaq, 1,981 issues rose and 438 fell.
This marked a two percent drop for the Dow Jones, which tracks 30 major companies.
President Trump frequently has touted the rising stock market as a sign his economic policies are working. The S&P 600 Index closed at 918.54 for a gain of 0.13 points or 0.01%.
The crucial question for today's long-term investors, of course, is does the selling stop here or do we plunge another 10% or so into official bear market territory?