Stock market plunges again, enters first correction in two years

Since the S&P 500 index peaked on January 26, the market has lost more than $3 trillion in total value.

However, European shares closed down more than 2% as a violent global sell-off in stock markets and spike in volatility shook investors.

The Dow suffered its worst daily point drop on record Monday, and briefly fell almost 1,600 points intraday. The blue chip average suffered its second 1,000-point drop in a week on Thursday.

The Nasdaq is down 188.96 points, or 2.6 per cent. A 10-percent loss is considered the formal threshold for a stock market correction.

The Dow Jones Industrial Average closed down more than 1,000 points, or 4 percent, during Thursday trading. The Dow gained 330.44 points, or 1.4 per cent, to 24,190.90.

However, those relatively small percentage movements overnight were closer to what markets expected, compared to the Dow's 4.6 per cent (1,175 point) drop earlier this week.

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Other notable index closes included the S&P 400 Mid-Cap Index at 1,819.45 for a gain of 18.16 points or 1.01%; the S&P 100 Index at 1,157.03 for a gain of 14.75 points or 1.29%; the Russell 3000 Index at 1,544.63 for a gain of 19.37 points or 1.27%; the Russell 1000 Index at 1,447.99 for a gain of 18.76 points or 1.31%; and the Dow Jones U.S. Select Dividend Index at 674.05 for a gain of 9.66 points or 1.45%.

Technology companies accounted for most of the broad gains, outweighing losses in energy stocks, which slumped as US crude prices declined, sending the price of oil below $60 a barrel for the first time this year. Crude slumped 3.5% on Friday and slipped below $60 a barrel for the first time this year. The benchmark 10-year yield fell 2 basis points to 2.86% Friday afternoon.

A week ago, the stock market began its dive with a 666-point sell-off after the Labor Department reported that wage growth was picking up.

At the heart of this week's pullback in the market has been a rise in USA bond yields due to growing expectations that a robustly performing economy will lead to higher inflation and a steady rise in official interest rates over this year.

Of course, in a risk-off scenario, emerging markets would sell off and the safe investments would move back into domestic hands, which is also good for bonds and the dollar. The losses were steady, unlike the sharp swings seen over the past few days.

As for the blue-chip Dow Jones index, it also experienced a sharp pullback. This was its biggest one-day reversal in two years.

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Stocks are mixed in the early going as traders digest a batch of company earnings reports.

Not only are corrections common during bull markets, they're seen as entirely normal and even healthy. That's also a big change: The market has been stable in the previous year because every time it inched lower, investors swooped in looking for bargains and soon sent them higher again.

Analysts warned that stocks had become too expensive.

After regular trading hours on Monday, S&P 500 E-mini stock futures rose 0.73%, suggesting some traders expect Wall Street to open with a gain on Tuesday. The travel website's 2018 outlook also disappointed investors.

Rising deficits could drive interest rates higher.

Investors also kept a close eye on the progress of the US government's spending bill.

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"The concentration of the job loss in Ontario and the focus upon lost part-time jobs in that province will no doubt feed debate on whether large minimum wage hikes took a toll on employment, but proving causality may remain contentious", said Derek Holt, economist at Scotiabank in a note.

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