U.S. stocks entered a formal correction Thursday, as two weeks of steep losses have cost two major index at least 10 percent of their value.
The Dow Jones industrial average and S&P 500, which tracks financial stocks, have sunk 10 and 12 percent since Jan. 26, when the indexes reached record highs of 26,616 and 2,872, respectively.
The Dow has lost 2,756 points since then while the S&P has shed 291 points. The Nasdaq has lost 9.7 percent of its value in the same span, falling short of the 10 percent threshold that defines a stock correction.
Investors fear that low unemployment, increasing U.S. growth and rising wages will spur the Federal Reserve to raise interest rates, which would boost the cost of borrowing money. Bond yields have spiked as analysts struggle with an increasingly volatile market.
The Dow closed 1,033 points lower on Thursday, the second day of the week it has experienced a four-digit loss. The Nasdaq lost 274 points on the day (3.9 percent), while the S&P 500 closed with a 100-point loss (3.75 percent).
Thursday’s close is the second time in history the Dow has lost more than 1,000 points in one day. It fell 1,175 points on Monday.
Wall Street is also concerned with aspects of a bipartisan budget deal that would increase federal spending by $300 billion while suspending the debt ceiling for one year.
The Committee for a Responsible Federal Budget warns it would “set the stage for more than $1.5 trillion of new debt over the next decade.”
The potential addition to the U.S debt, compounded by the $1.5-trillion GOP tax cuts, has investors worried about increased borrowing costs as interest rates spike.