Wall Street dives, setting the ASX up for heavy losses at open

The Dow tumbles more than 400 points

After suffering its steepest drop since February in the previous session, the Dow Jones industrial average closed down more than 2% and has shed more than 1,300 points since Tuesday.

Tech stocks declined due to rising bond yields, which followed a spike in rates for the benchmark United States 10-Year Treasury.

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.

Stocks were lower at the halfway point Thursday in volatile trading, with the Dow Industrials down more than 1,000 points over two days.

MSCI's gauge of stock performance in 47 countries fell 2.2 percent, the pan-European FTSEurofirst 300 index of leading regional share lost 2.1 percent.

The current panic might be quelled by de-escalation in the US trade war with China, Feinseth said, as it could restore faith in the tech sector, which was hardest-hit in the past two days.

The financial sector fell 2.9 percent, also hurt by a 2.7 percent drop in bank stocks a day before three of the biggest banks were to report quarterly results.

Paint and coatings maker PPG gave a weak third-quarter forecast Monday, while earlier, Pepsi and Conagra's quarterly reports reflected increased expenses. Amazon skidded 6.2 percent to $1,755.25.

After hitting an intraday high of 28.84, the CBOE Volatility Index, popularly known as the "fear gauge", ended the day up 2 points at 24.98, its highest close since February 12.

Amazon has soared 50 percent this year, but has fallen 14 percent from its all-time high in early September.

Tech stocks, hit hard Wednesday, crept back into positive territory Thursday morning. Delta Air Lines shares rose 3.8 percent after the airline beat profit expectations. The Nasdaq composite rose 15 points, or 0.2 percent, to 7,436.

The CBOE Volatility Index, or VIX, a market barometer often dubbed Wall Street's fear gauge, surged almost 40%.

Mona Mahajan, US investment strategist at Allianz Global Investors, said: "The market is digesting the potential that rates moving upwards eventually seep into the real economy in the form of mortgage rates, auto rates, student lending rates". A report showing only a modest pickup in consumer prices seemed to calm investors just before the open. Markets in France, Britain and Germany fell after stocks declined sharply in Hong Kong and Japan.

Investors also are bracing for bad trade-related news as corporate reporting season gets started in earnest this week.

The S&P 500 fell more than a percent, while the Nasdaq fared slightly better.

But a recent International Monetary Fund warning on global growth taking a hit from trade disputes has hit confidence in the stock market, as has US Treasury yields at more than 7-year highs, signalling a tightening of capital globally. At its low for the day, the Dow was down 669 points. Drops of 5% to 10%, or even higher, can occur during global financial and political uncertainty, but they're paired with similar rises.

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