Markets in red, traders expect more volatility

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In Toronto, the S&P/TSX composite index was down 31.08 points or 0.21 per cent to 15,034.53, after losing almost 280 points and gaining more than 45 points throughout the day.

Investors remain fearful that signs of rising inflation and higher interest rates could bring an end to the bull market that has sent stocks to record high after record high in recent years.

The Dow Jones Industrial Average dropped more than 1,500 points at one point on Monday.

On Thursday, U.S. stocks plummeted, with the Dow sinking over 1,000 points, as the rise in yields continued to weigh on the market. There were two 1,000-point declines for the Dow, as well as the index's fourth-biggest gain ever.

The S&P 500 is down 80.47 points, or 2.9 per cent. The Dow dropped from a January 26 peak of 26,567, closing at 23,860 - a plunge of 10.8 percent.

Of those corrections, only two have turned into bear markets, which is a more severe and more sustained downturn in the market, when stocks drop by at least 20 per cent. "Now, they're moving higher and investors are concerned they might move higher faster". That meant all three indexes dipped into what is considered a "correction" in the markets. That's because growing deficits force the U.S. Treasury to issue more bonds, and investors are likely to demand higher rates before buying them.

European shares fell 5.3 per cent for the week, which meant they also endured their biggest weekly drop since January 2016, as the gains notched up over nearly half a year of trading were erased in a series of sell-offs.

So if the world economy keeps on growing, and it's business as usual, developed market tightening and a falling USA dollar could be cushioned by emerging market demand.

That fed into widespread concerns that market prices were too high following a strong run over the past year that pushed many indexes to record highs.

"Equities have traded in a roller coaster fashion all week and today is no exception", said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

The market's turmoil began last Friday and has continued this week as investors anxious about early signs of inflation.

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Worries about inflation set the market rout in motion last Friday, and many market watchers have been predicting a pullback after the market's relentless march higher over the past year. "Corrections are caused by people having to reposition for new environments".

The market began falling in the first few minutes of trading, and the pace of the declines worsened as the day wore on.

Benchmark U.S. crude oil lost 64 cents, or 1 percent, to $61.15 a barrel in NY.

In Europe, Germany's DAX was down 2.1 percent and the CAC 40 in France lost 2 percent.

The S&P 500 gave up 44 points, or 1.7 percent, to 2,637.

"The fact that Monday's lows were breached on Thursday signals more trouble ahead, and rallies are likely to give way to rising bond yields", Peter Cardillo, economist at First Standard Financial in NY, told Reuters.

The yield on the benchmark 10-year treasury note stood at 2.855 per cent - off from the four-year high of 2.885 hit on Monday.

Meanwhile, benchmark USA crude oil fell below $60 United States a barrel for the first time this year, falling $1.95 to settle at $59.20 as investors dumped risky assets.

The economy is already running hot, with the nation's unemployment rate at a 17-year low of 4.1 per cent.

The dollar fell to 108.84 yen from 109.42 yen. The euro fell to $1.2355 from $1.2399.

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