The Dow Jones industrial average on Wednesday closed out a wildly volatile February with another crazy day.
The basket of 30 blue-chip stocks dropped 380 points, finishing down 1.5 percent on the day and down 4.3 percent for the month. Heavy equipment maker Caterpillar, health giant UnitedHealth and industrial conglomerate General Electric were the big drags.
The Standard & Poor’s 500-stock index dropped 1.1 percent Wednesday. It is down 3.9 percent for February but still up 1.5 percent in 2018. The Dow is up 1.25 percent this year.
The February losses for both indexes broke 10 consecutive months of gains, which is the most since 1959.
The tech-heavy Nasdaq composite index finished down less than 1 percent on Wednesday but is up more than 5 percent on the year.
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Volatility returned to markets during February with a vengeance. The Dow and S&P plunged 10 percent into correction territory in early February on a positive Labor Department report on wages that inflamed Wall Street’s fears of inflation.
Wednesday’s plunge left the Dow down 6 percent from its January 2018 all-time high, while the S&P 500 is off about 5.5 percent. The Nasdaq is 3.1 percent below its all-time peak.
Markets rebounded to return close to their January all-time highs when new Federal Reserve Chairman Jerome H. Powell again spooked investors. Powell appeared before the House Financial Service Committee on Tuesday, where he left open the possibility of four interest rate hikes this year. That sent markets into a two-day nose-dive that was interrupted by some upswings.
“Investors are grappling with the prospects of higher than expected interest rates and inflation, and a potentially more hawkish Fed,” said Chris Zaccarelli, chief investment officer at Charlotte-based Independent Advisor Alliance.
“If the Federal Reserve raises rates more quickly than previously expected, then it’s likely to put a damper on stocks in the near term.”
There could be more fireworks in the market on Thursday. Powell is scheduled to appear before the Senate Banking Committee in the morning, when Wall Street and corporate America will be hanging on every word.