Markets Plummet As Global Stocks Meltdown
The Dow Jones Industrial Average dropped as much as 1,600 points heading in the closing of the session on Monday, after a sharp, accelerated period of selling. The index closed trading 1,177 points lower, erasing all gains for the year and only two stocks finishing higher. The decline follows a drop of 666-point in the index on Friday, which is the biggest point drop in a single day since October 2008.
Elsewhere, the Nasdaq 100 closed down 3.77%, and the S&P 500 closed 4.08%. Traders rushed to the safety of the Treasury amidst the sell-off stocks, with the ten-year yield at 2.72% down 12 basis point. Bond yields usually go down as demand rises, and thereby causing prices to go up. After Friday’s jobs report, the benchmark yield reached 2.85% its highest since 2014.
The price of gold, which is another haven was also slightly higher on Monday. In a note written by John Normand to JPMorgan clients, inflation has suddenly become one of the hottest topics in markets, revitalizing many late cycle concerns over corporate margins, fed tightening, volatility, bond/stock correlations and asset allocation versus hedging strategies.
On Monday, S&P 500 biggest losing stock was Wells Fargo. The bank’s shares fell 9.94% to $57.72 after the Federal Reserve barred it from expanding any further until it improves its governance and compliance policies.
The biggest drop in the Dow Jones was ExxonMobil, which went down more than 6%. Trump’s Administration downplayed the gravity of the selloff, with Deputy Press Secretary Shah telling journalists that markets do fluctuate and that this economy has got solid fundamentals.
The markets could be performing poorly because some of the most influential investors unprecedentedly betting that near-term bonds will increase — and that may continue pressuring stock traders.Fears for possible unprecedented inflation following signs of firmer wage growth and US tax cuts could also be another reason for the markets latest slump.
