That means they are in what is known on Wall Street as a "correction", fueled by fears that a long stretch of low interest rates and tame inflation, which helped driven up stock prices, might be coming to an end.
This follows a rough day of trading in the States yesterday with the Dow Jones falling over 1,000 points and is now on track to suffer the biggest weekly decline it has seen since October 2008 - the height of the global financial crisis. Numerous companies that rose the most over the a year ago have borne the brunt of the selling.
Few big companies emerged unscathed, with Dow giants Boeing and Caterpillar losing around five percent, around the same range as tech titans Amazon and Facebook.
USA stocks started to tumble last week after the Labor Department said workers' wages grew at a fast rate in January.
New YorkFederal Reserve President Bill Dudley told Bloomberg News on Thursday that if the US economy keeps getting stronger the central bank may be justified in raising rates four times this year.
US stocks crept higher on Wednesday as volatility eased and buyers returned to a market that is recovering from a record fall for the Dow Jones Industrial Average earlier this week. The Fed's key rate was "near zero for years".
Earlier, the Dow Jones Industrial Average fell by more than 1,000 points for the second time this week. The British FTSE 100 index fell 2.6 percent. The Nasdaq composite added 83 points, or 1.2 percent, to 6,861.
He added, "Right now we're having a correction in the bull market, but it's painful for some".
Markets have corrections when they fall 10% or more from a previous high. When bond yields rise, those stocks become less appealing to investors seeking income. Employers are hiring at a healthy pace, with unemployment at a 17-year low of 4.1 percent. And major economies around the world are growing in tandem for the first time since the Great Recession.
"When the market declines sharply, everyone naturally wonders, 'What's wrong?' Nothing is wrong economically", said Greg McBride, chief financial analyst for Bankrate.com, according to NBC News. Bond yields are rising as the Federal Reserve trims its United States bond holdings. That combination usually carries stocks higher.
The bottom of this recent slide remained elusive for investors, who have been whipsawed this week by huge swings that have shaken a market that had only climbed steadily for months.
"If we see 3.0 percent next week that is going to spook people more - the equity market psyche is fragile at this point". "There's a fair amount of volatility in the market, and our belief is the volatility is leaving investors riddled with stress and uncertainty, which is likely to continue". Stocks rebounded after investors "focused again on a strong economy and robust profits", he said.
At the same time, higher interest rates can make investment alternatives to stocks, such as bonds, more attractive. "It can take two to three weeks to work through the system".
After a sharp loss Wednesday, benchmark US crude lost 64 cents, or 1 percent, to $61.15 a barrel in NY. Brent crude, the benchmark for global oil prices, lost 76 cents, or 1.1 percent, to $66.86 a barrel in London. The Nasdaq plummeted 275 points to close at 6,777. Silver rose 10 cents, or 0.6 percent, to $16.34 an ounce, and copper fell a penny to $3.08 a pound.
CURRENCIES: The dollar recovered to 109.42 yen from 108.61 yen late Tuesday. The euro held steady at $1.2248. That also sent the pound higher. Germany's DAX lost 2.6 percent while France's CAC 40 ended down 2 percent.
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