Bragging rights: Wall Street's lousy, disappointing, not-too-good, somewhat-bad day

Richard Drew | AP | BDN

Richard Drew | AP | BDN

USA stock futures pointed to a third day of losses at the opening on Tuesday, deepening a correction to the stock market's long-running rally that saw the biggest intraday fall in history for the Dow Jones Industrial Average on Monday.

Stock markets around the world, particularly on Wall Street, have tumbled this week as fears over prospective US interest rate hikes combined with fears that markets were a bit frothy following a strong run over the past year that saw many indexes hit record highs.

USA stocks slipped in choppy trading on Wednesday as technology and energy stocks fell, while investors adjusted to a market with greater volatility following wild swings of the past few sessions.

The Standard & Poor's 500 index, a broader market barometer tracked by many index funds, climbed 1.7 percent to 2,695.14.

The stock market has posted more than 70 record-high closes since President Trump took office.

U.S. Treasury Secretary Steven Mnuchin said recent volatility was not enough to rock market fundamentals.

Investors are also wary about US lawmakers wrangling to extend the so-called debt ceiling - funding for the USA government runs out on February 8 unless a stopgap bill manages to pass the Senate later on Wednesday. The Dow notched its biggest intraday decline in history with a almost 1,600-point fall.

A key jobs report on Friday - showing strong growth in the United States labour market - appears to have been the catalyst for the rally to come to a halt, at a time when some observers have suggested a so-called correction might be due. The S&P 500 came close to the 10 percent correction threshold but did not cross into it.

"Corrections are a normal part of the investing process and not a reason to sell quality investments", said Alan Skrainka, chief investment officer at Cornerstone Wealth Management in Des Peres, Missouri.

U.S. President Donald Trump has repeatedly touted the bull market since his election as proof of his capability of managing the country's economy.

According to Unicredit strategists, the greater weight placed by European markets on industrial stocks and financials should see Europe better suited to weather the current financial storm. The Dow was up over 26 percent from January 2017 to January 2018 - too good, analysts warned. By the end of the day Tokyo had added just 0.2 percent - having opened nearly three percent up - while Shanghai lost 1.8 percent and Seoul plunged 2.3 percent.

Japan's Nikkei 225 fell 4.7 per cent, which is its worst fall since November 2016 and taking the index is down to a four-month low. The VIX index, which is called Wall Street's "fear gauge" because it measures how much volatility investors expect in the future, is now at 21, about double where it was two weeks ago.

A 10 percent drop from a peak is often referred to as a "correction" while a bear market is generally defined as a 20 percent or so drop in indexes. This is why bubbles can last for years before they eventually burst.

But analysts say the market is being far too jittery.

Australia closed up 0.7 percent.

A rebound across Asian markets ran out of steam Wednesday, with most falling back into the red and extending the previous day's hammering. This will be creating opportunities for USA companies, assuming the anti-trade banter is simply a negotiating point. The FTSE 100 closed down 2.6 percent at 7,141.4 points.

USA 10-year yields rose back as high as 2.80 percent after approaching two-week lows around 2.65 percent on Tuesday US10YT=RR.

"I don't sense a whole lot of panic", Doug Ramsey, chief investment officer at Leuthold Group LLC, said by phone.

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