Stocks are tumbling again, Dow down 400

Stocks are selling off again.

In late-morning trade on Thursday, each of the major averages was in the red with the Dow falling 1.7%, or 400 points, the Nasdaq down 1.6%, or 115 points, and the S&P 500 down 1.4%, or 37 points.

Floor reactions to stock market plunge:

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Floor reactions to stock market plunge
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Floor reactions to stock market plunge
A trader looks at a screen that displays the Dow Jones Industrial Average on the floor of the New York Stock Exchange, (NYSE) in New York, U.S., February 5, 2018. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Feb. 5, 2018. U.S. stocks plunged, sending the Dow Jones Industrial Average down almost 1,600 points, as major averages erased gains for the year.�Photographer: Michael Nagle/Bloomberg via Getty Images
A trader works on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on February 5, 2018 in New York. Wall Street stocks endured a brutal session Monday, with the Dow seeing one of its steepest ever one-day point drops, as the heady bullishness of early 2018 gave way to extreme volatility. / AFP PHOTO / Bryan R. Smith (Photo credit should read BRYAN R. SMITH/AFP/Getty Images)
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Feb. 5, 2018. U.S. stocks plunged, sending the Dow Jones Industrial Average down almost 1,600 points, as major averages erased gains for the year.�Photographer: Michael Nagle/Bloomberg via Getty Images
A monitor displays stock information on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Feb. 5, 2018. U.S. stocks plunged, sending the Dow Jones Industrial Average down almost 1,600 points, as major averages erased gains for the year.�Photographer: Michael Nagle/Bloomberg via Getty Images
NEW YORK, NY - FEBRUARY 05: Traders work on the floor of the New York Stock Exchange (NYSE) on February 5, 2018 in New York City. Following Fridays's over 600 point drop, the Dow Jones Industrial Average briefly fell over 1500 points in afternoon trading. (Photo by Spencer Platt/Getty Images)
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Feb. 5, 2018. U.S. stocks plunged, sending the Dow Jones Industrial Average down almost 1,600 points, as major averages erased gains for the year.�Photographer: Michael Nagle/Bloomberg via Getty Images
NEW YORK, NY - FEBRUARY 05: Traders work on the floor of the New York Stock Exchange (NYSE) on February 5, 2018 in New York City. Following Fridays's over 600 point drop, the Dow Jones Industrial Average briefly fell over 1500 points in afternoon trading. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - FEBRUARY 05: Traders work on the floor of the New York Stock Exchange (NYSE) on February 5, 2018 in New York City. Following Fridays's over 600 point drop, the Dow Jones Industrial Average briefly fell over 1500 points in afternoon trading. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - FEBRUARY 05: Traders work on the floor of the New York Stock Exchange (NYSE) on February 5, 2018 in New York City. Following Fridays's over 600 point drop, the Dow Jones Industrial Average fell over 300 points after the Opening Bell. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - FEBRUARY 05: Traders work on the floor of the New York Stock Exchange (NYSE) on February 5, 2018 in New York City. Following Fridays's over 600 point drop, the Dow Jones Industrial Average fell over 300 points after the Opening Bell. (Photo by Spencer Platt/Getty Images)
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On Wednesday markets finished the day in the red, though only the tech-heavy Nasdaq saw any meaningful losses, but the weak close certainly showed investors that markets have not yet settled down after the chaotic two days of trading we saw to start this week.

On Monday, the Dow lost 1,175 points, its largest point-decline on record before gaining 560 points on Tuesday in a snapback rally.

Thursday’s market decline appeared once again tied to the increase in interest rates, with the 10-year Treasury yield touching 2.86% as investors continue to work out what a rising interest rate environment means for stocks after nearly a decade of low, stable interest rates and low inflation.

As we noted Wednesday, however, tech stocks fell more than the broader market and some analysts have pointed to these market leaders —Alphabet (GOOGL), Facebook (FB), Microsoft (MSFT), Amazon (AMZN), and Apple (AAPL) — as potential indicators of markets having not yet worked out all the stress inflicted in the 8% S&P 500 decline that happened in just a handful of trading days.

Among these companies, only Apple was holding up better than the broad market on Thursday.

The VIX, which tracks market volatility, was also higher on Thursday, reflecting continued anticipated stresses in markets. The surge in volatility on Monday, which sent the VIX spiking to multi-year highs in just hours, led to the implosion of products designed to bet against volatility, exacerbating markets stresses in a rapid unwind. 2017, you’ll recall, was one of the least-volatile years on record.

Wrong-footed volatility bets, and not the notion that too much good economic news was rejected by financial markets, has become the dominating theory behind why markets tanked on Monday. The unsettled nature of markets since Monday shows investors have still not sorted out what this means going forward.

Wall Street strategists, however, remain steadfast in their view that the recent declines in the stock market do not mark the end of the bull market run we’ve seen since the financial crisis, and which accelerated in 2017.

Strategists led by James Barty at Bank of America Merrill Lynch wrote Wednesday that, “In our view markets had gone too far too fast two weeks ago and the correction is merely an unwind of very overbought conditions.” 

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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Markets

DJIA 24,664.89 -83.18 -0.34%
NASDAQ 7,238.06 -57.18 -0.78%
S&P 500 2,693.13 -15.51 -0.57%
NIKKEI 225 22,187.71 -3.47 -0.02%
HANG SENG 30,526.86 -181.58 -0.59%
DAX 12,567.42 -23.41 -0.19%
USD (per EUR) 1.23 0.00 -0.02%
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JPY (per USD) 107.63 0.20 0.18%
GBP (per USD) 1.41 0.00 -0.12%

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