NEW YORK (AP) — U.S. stocks are plunging toward their worst loss in six months on Wednesday as technology companies continue to take sharp losses. The Dow Jones Industrial Average fell 700 points in afternoon trading.
The losses were widespread as bond yields remained high after steep increases last week. Companies that have been the biggest winners on the market the last few years, including technology companies and retailers, suffered steep declines.
The S&P 500 index sank 73 points, or 2.5 percent, to 2,807 as of 3:30 p.m. Eastern time. It’s on track for its fifth straight drop, which hasn’t happened since right before the 2016 presidential election. Nasdaq composite, which has a high concentration of technology stocks, tumbled 244 points, or 3.2 percent, to 7,495. It’s fallen 6.3 percent over the last five days.
The Dow Jones Industrial Average gave up 738 points, or 2.8 percent, to 25,686. The Russell 2000 index of smaller-company stocks shed 37 points, or 2.3 percent, to 1,584.
Microsoft dropped 4 percent to $107.82. Amazon skidded 4.8 percent to $1,781.21. Industrial and internet companies also fell hard. Boeing lost 4 percent to $370.04 and Alphabet, Google’s parent company, gave up 3.2 percent to $1,109.08.
After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged.
Gina Martin Adams, the chief equity strategist for Bloomberg Intelligence, said investors are concerned about the big increase in yields, which makes it more expensive to borrow money. She said they also fear that company profit margins will be squeezed by rising costs, including the price of oil.
Paint and coatings maker PPG gave a weak third-quarter forecast Monday, while earlier, Pepsi and Conagra’s quarterly reports reflected increased expenses.
“Both companies highlighted rising costs, not only input costs but increasing operating expenses (and) marketing expenses,” she said.
Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 miles an hour. Berkshire Hathaway dipped 4.1 percent to $214.64 and reinsurer Everest Re slid 4.6 percent to $218.97.
Luxury retailers tumbled. Tiffany plunged 9.5 percent to $111.28 and Ralph Lauren fell 7.3 percent to $118.42.
The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy. Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks.
The 10-year Treasury yield rose to 3.22 percent from 3.20 percent late Tuesday after earlier touching 3.24 percent. It was at just 3.05 percent early last week.
Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices. Adams, of Bloomberg Intelligence, said investors have concerns about their future profitability, too.
That’s helped make technology stocks more volatile in the last few months.
“As stocks go up, tech goes up more than the stock market. As stocks go down, tech goes down more than the stock market,” she said.
Sears Holdings nosedived after the Wall Street Journal reported that the struggling retailer hired an advisory firm to prepare a bankruptcy filing that could come within days. The stock fell 15 percent to 50 cents. It was more than $40 five years ago.
Sears has closed hundreds of stores and sold several famous brands or put them on the block as it sees more customers abandon its stores.
The Justice Department approved CVS’ purchase of health insurer Aetna. Aetna intends to sell its Medicare Part D prescription drug benefit unit to complete the $69 billion acquisition.
CVS dipped 0.1 percent to $79.40 and Aetna added 0.5 percent to $204.64.
Defense and aerospace parts supplier Esterline Technologies rallied after it agreed to be bought by TransDigm for $122.50 per share in cash, or $3.61 billion. Esterline climbed 30.6 percent to $115.97 while TransDigm slipped 2.9 percent to $341.20.
Benchmark U.S. crude oil fell 2.4 percent to $73.17 a barrel in New York. Brent crude, the international standard, lost 2.2 percent to $83.09 a barrel in London.
Wholesale gasoline shed 2.7 percent to $2.02 a gallon. Heating oil fell 1.2 percent to $2.39 a gallon. Natural gas rose 0.6 percent to $3.28 per 1,000 cubic feet.
Gold rose 0.2 percent to $1,193.40 an ounce. Silver dipped 0.5 percent to $14.33 an ounce. Copper fell 0.9 percent to $2.78 a pound.
Japan’s Nikkei 225 added 0.2 percent, South Korea’s Kospi dropped 1.1 percent and the Hang Seng in Hong Kong gained 0.1 percent.
The CAC 40 in France dropped 2.1 percent, Germany’s DAX lost 2.2 percent and the FTSE 100 in London fell 1.3 percent.
Stocks from emerging markets were also hard hit. Investors see many of these countries as being vulnerable to higher U.S. interest rates, which can pull away investment dollars. Brazil’s Bovespa lost 2.5 percent and the Merval in Argentina sank 2.2 percent.
The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday. The euro rose to $1.1525 from $1.1496. The British pound rose to $1.3197 from $1.3146.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay