The Dow Jones industrials plunged more than 1,000 points Thursday, deepening a weeklong sell-off and dragging the stock market into an official “correction” for the first time in two years as fearful investors sought to get out before their losses mounted.
The rout marked a stark turnabout in investors’ mood from just two weeks ago, when indexes set their latest record highs. Since then, the Dow and the Standard & Poor’s 500 have fallen 10 percent, Wall Street’s traditional definition of a correction.
“In January, we talked about fear of missing out. What we have now is what I call fear of getting caught,” said Tom Martin, senior portfolio manager with Globalt Investments.
The market began falling in the first few minutes of trading, and the pace of the declines worsened as the day wore on. Many of the companies that rose the most over the last year have borne the brunt of the selling. Facebook and Boeing have both fallen sharply.
A hint of rising inflation and interest rates last week was all it took to set off a cascade of investor angst.
After huge gains in the first weeks of this year, stocks started to tumble last Friday after the Labor Department said workers’ wages grew at a fast rate in January.
That’s good for the economy, but investors worried that rising wages will hurt corporate profits and could signal an increase in inflation. A pickup in inflation could prompt the Federal Reserve to raise interest rates at a faster pace, which would act as a brake on the economy. Inflation can also send bond yields higher, which makes it more expensive for individuals, companies and even the U.S. government to borrow money.
Scott Wren, senior global equity strategist for Wells Fargo Investment Institute, said investors are worried that the higher wages could eat into corporate profits and that the Fed could “make a mistake” and raise rates too quickly.
The Dow Jones industrial average lost 1,032.89 points, or 4.1 percent, to 23,860.46. Boeing, Goldman Sachs and Home Depot took some of the worst losses.
The S&P 500, the benchmark for many index funds, shed 100.66 points, or 3.8 percent, to 2,581. Even after this week’s losses, the S&P 500 index is up 12.5 percent over the past year. The Nasdaq composite fell 274.82 points, or 3.9 percent, to 6,777.16.
Corrections are seen as entirely normal occurrences, and the market, currently in its second-longest bull run of all time, has not seen one in two years, an unusually long time. Many market watchers have predicted a pullback for some time, saying stock prices have become too expensive relative to company earnings.
Pressure mounted on White House chief of staff John Kelly on Thursday as questions swirled about his defense of a senior aide he fought to keep in a highly sensitive West Wing job despite accusations of spousal abuse from two ex-wives.
White House staff secretary Rob Porter, a member of President Donald Trump’s inner circle and arguably Kelly’s closest aide, cleaned out his desk Thursday. But the aftershocks of his resignation reverberated amid concerns about his access to classified information.
Kelly himself faced criticism for defending Porter only to belatedly reverse course hours after the publication of photos showing one of the ex-wives with a black eye.
“It’s fair to say we all could have done better over the last few hours or last few days in dealing with this situation,” said White House deputy press secretary Raj Shah, who faced a barrage of questions about Kelly during a press briefing.
Though the allegations against Porter became public this week, Kelly learned last fall that something was amiss with the staff secretary’s attempts to get a security clearance, according to an administration official who insisted on anonymity to discuss internal matters.
The chief of staff had sought information about the status of security clearance applications for top aides, and it was then he learned there were allegations against Porter from his ex-wives, said the official. Porter and Kelly later discussed the allegations.
The White House official said that staffers felt misled about how Porter downplayed the allegations, both to Kelly at the end of the 2017 and to White House Counsel Don McGahn near the beginning of Trump’s term.
When the allegations first emerged against Porter, a number of senior aides rallied around him, and the White House acknowledged that personal relationships may have played a role in their response. Communications Director Hope Hicks, who was dating the staff secretary, helped draft the original statements defending him, according to three current and former White House officials.
Shah said Thursday that Hicks later “recused” herself from some aspects of the matter, but it was unclear from what. Kelly, meanwhile, was Porter’s loudest defender, including in the first hours after the graphic photos of alleged abuse emerged.
Only later did the chief of staff, who had argued for Porter to keep his post, release a second statement in which he said he supported Porter’s resignation.
Shah said Trump was not aware until Tuesday of the accusations against Porter, who was a frequent presence in the Oval Office and helped craft last week’s State of the Union address. By the time the president was fully briefed of the claims against Porter on Wednesday, the once-rising White House star had already resigned, according to the official.
A number of lawmakers criticized Kelly, and a leading women’s group called for the chief of staff to resign.
The president, for his part, has not signaled to allies that he is on the verge of making a change. But his frustration with Kelly has grown recently.
ABU DHABI, United Arab Emirates—Former President George W. Bush said on Thursday that "there's pretty clear evidence that the Russians meddled" in the 2016 American presidential election, forcefully rebutting fellow Republican Donald Trump's denials of Moscow trying to affect the vote.
While never mentioning President Trump by name, Bush appeared to be pushing back on Trump's attempts to have warmer relations with Russia, as well as his comments on immigration.
The White House did not immediately comment on Bush's remarks.
"There's pretty clear evidence that the Russians meddled," Bush said at a talk in Abu Dhabi, the capital of the United Arab Emirates. "Whether they affected the outcome is another question."
Bush also said that "it's problematic that a foreign nation is involved in our election system. Our democracy is only as good as people trust the results."
U.S. intelligence agencies have concluded Russia meddled in the 2016 election to help Trump win. Numerous investigations are under way to determine whether Trump's campaign aided the Kremlin in its efforts.
Trump has repeatedly denied any "collusion" with Russia.
Without making any new promises, House Speaker Paul D. Ryan said Thursday he was committed to bringing an immigration bill to the floor as the “next big priority” to protect so-called Dreamers from deportation by a March deadline.
Ryan is trying to strike a delicate balance by appealing to Democrats and his own centrist Republicans—whose votes he needs to pass a sweeping budget deal—while not specifically embracing any particular legislative proposal that could alienate conservatives or be met with disapproval by President Donald Trump, whose support he needs for any immigration plan.
“To anyone who doubts my intention to solve this problem and bring up a DACA and immigration reform bill, do not,” Ryan said, referring to the Obama-era Deferred Action for Childhood Arrivals program, which protects young undocumented immigrants brought here as children from deportation. Trump is ending the program March 5, but a court case is allowing it to continue temporarily.
“Please know that we are committed to getting this done.”
The speaker’s remarks came a day after Minority Leader Nancy Pelosi commandeered the House floor for eight hours, pressing Ryan for a commitment—similar to one Senate Leader Mitch McConnell made—to quickly address the issue.
Both parties want to prevent deportations of the nearly 700,000 immigrants who have lived in the U.S. illegally as minors but now can work or attend school as young adults under DACA.
Ryan had promised when he took hold of the speaker’s gavel in 2015 that he would not consider legislation unless it has support from most of the GOP majority—all but dashing hopes of a compromise with Democrats—but he since has softened that approach and said he will bring forward a bill Trump will sign.
On Thursday, Ryan ventured a bit further, suggesting the ultimate bill would be bipartisan.
“I’m confident we can bring a bipartisan solution to the floor that can get signed into law and solve this problem,” he said.
PYEONGCHANG, South Korea
North Korean leader Kim Jong Un presided over an extravagant military parade in Pyongyang’s Kim Il Sung Square on Thursday, grabbing the spotlight on the eve of the Pyeongchang Winter Olympics in South Korea to thumb his nose at Washington while making a point of showing off his new-found restraint toward Seoul.
The parade itself had been anticipated for weeks.
North Korea announced last month that it would hold a big event to mark the 70th anniversary of the founding of its military.
But instead of broadcasting the morning event live, North Korean television aired an edited version later in the day, giving it a somewhat lower profile than expected.
This time, Kim fine-tuned his more fiery rhetoric toward Washington.
Kim said the parade marks North Korea’s emergence as a “global military power.”