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Another Bloodbath, Dow In Correction Territory -- U.S. Commentary

U.S. stocks were hammered yet again Thursday, as markets quickly tanked after an initial move higher.

A brutal mid-day sell-off only worsened in the final hour of the session, driving the Dow Jones Industrial Average into correction territory. Stocks have tumbled from record highs over the past week, as traders grew concerned about inflation and higher interest rates.

The Dow shed 1,032 points, or 4.2%, to 23,860, and is down more than 10% from all-time highs set late January. The S&P 500 index closed off 3.8% at 2,581, while the Nasdaq Composite Index was down 274 points, or 3.9%, at 6,777.

The CBOE Volatility Index (VIX) spiked 28%.
"We see the stock correction as resulting from higher bond yields which have followed from increased estimates of Fed hikes, in turn driven by raised inflation expectations," said Paul Mortimer-Lee, Chief Market Economist at BNP Paribas. "A calmer period could lie ahead but the illusion of low volatility forever is smashed."

"Valuations still remain expensive for many assets and central bank support for prices is diminishing."

A Federal Reserve member today said the recent correction in U.S. stocks will have little impact on the broader economy, a sign that they still plan to raise interest rates at least three times in 2018.

"More volatility in the markets, and maybe addressing some of the excesses and imbalances in the markets, by having a little more volatility, may be a healthy thing," Federal Reserve Bank of Dallas President Robert Kaplan said in an interview with Bloomberg Television.

Boeing (BOE) was among the day's big losers after the Wall Street Journal said the company was in talks to buy aerospace parts maker Woodward.

On the other hand, Twitter Inc. (TWTR) reported revenue and adjusted earnings per share for the fourth quarter beat analysts' estimates. Shares jumped 14 percent.

Yum! Brands (YUM) announced a new partnership with online and mobile takeout food-ordering company Grubhub Inc. (GRUB) to drive incremental sales to KFC and Taco Bell restaurants in the U.S. Grubhub shares surged up 28 percent.

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