The S&P 500 slumped 3.8 per cent on Thursday while the Dow dropped 4.2 per cent as losses accelerated late in the trading day, and both indices have now fallen more than 10 per cent from their January 26 record highs.
There's a psychological aspect to crashes, as people join the rush to get out of the market, fearing that things are only going to get worse.
A steep dive in the final minutes of trading in the United States, shortly before the NZX opened at 10am, put the Dow into "correction" territory, down 10.3 per cent on the record it set on January 26.
Asian markets on Friday followed Wall Street down as fearful US investors pulled out of the market, sending the Dow into "correction" territory for the first time in two years. U.S. West Texas Intermediate (WTI) crude settled at $59.20, down 3.2 percent.
"What's happened here is an understanding that inflation is returning and that the central bank quantitative easing that we've grown accustomed to is coming to an end", says Jim Bianco of Bianco Research.
The dollar index rose 0.22 percent, with the euro down 0.09 percent to $1.2234.
The 10-year Treasury came in at 2.83 percent on Friday, with the note yield almost hitting 2.885 percent on Thursday, a four-year high that produced a big equity sell-off earlier this week. The company also issued a disappointing forecast. Its shares sank $19.03, or 15.5 percent, to $104. He also said that there is nothing wrong with the economy; if fact, the economy is performing better than it has in the last decade.
Stocks have failed to hold a strong rebound since Friday, when a better-than-expected report on wages added to worries about higher United States inflation.
The Dow was up 264 points, or 1.1 percent, at 24,122. But stock prices have climbed faster than profits in recent years. It was up as much as 349 in early trading.
"The S&P 500 hasn't moved into correction mode this quickly, ever", said Lindsey Bell, investment strategist at CFRA Research. And the 2018 gains for the Dow and S&P have been wiped out. What's unusual is that there hasn't been a correction in the stock market since 2016.
The percentage of individual investors expecting stock prices to drop is at a three-month high of 35 percent, according to weekly survey results released Thursday by the American Assn. of Individual Investors.
USA stocks ended a wild week with a burst of buying, but still recorded their worst week in two years and investors braced for more volatile trading days ahead.
The Standard & Poor's 500 index slipped 1 point, or 0.1 percent, to 2,579. The yield on the 10-year note was as low as 2.04 percent as recently as September.