US shares slumped yesterday for the second time this week, amid mounting fears of a dent in corporate profits later this year.
At the close of business in New York, the Dow Jones Industrial Average dropped 74.43 to 5,845.98, its fourth fall in a row since reaching a record high of 5,689 only a week ago.
Traders raced to position themselves in the last hour of trading last night, ahead of the producer prices index due out later today, in a repeat of the frenzied sell-off that followed last Friday's March jobs data.
Analysts pointed to recent strength in the US dollar and the threat of rising interest rates, together with the highest bond yields for eight months,denting hopes that corporate profits will rise later this year.
Scott Black, head of Delphi Capital Management, in Boston, said last night: "You have a two-edged sword cutting against you. The air has got to come out of the balloon."
Stephen Mindnich, senior trader at Jefferies & Co, said: "Higher rates are going to scare some people and the stronger dollar is starting to hurt some of the multinationals. They are going to find it harder to sell their goods abroad."
Bonds were becoming increasingly attractive, said Mark Richardson, chief investment officer at Chase Asset Management. "It dawns on people that better values are in bonds."
On Monday, stocks and Treasury bonds slumped more than 80 points on news of a 140,000 rise in the number of US jobs.
The swiftness of the late sell-off yesterday left dealers reeling. "The phone rang, the Dow was down 25," said one. "I got off the phone five minutes later, and the Dow was down 80."Reuse content