Tue, 20 Nov 2018

U. S. stocks plummet, Dow loses 1,033 points

Jakarta News
09 Feb 2018, 08:38 GMT+10

NEW YORK, New York - U.S. stock markets plunged again on Thursday creating widespread panic on Wall Street which saw the Dow Jones close down more than one thousand points.

“The dust hasn’t settled yet, and I think both buyers and sellers are trying to figure out what this market really wants to do,” Jonathan Corpina, senior managing partner for Meridian Equity Partners in New York told the Reuters Thomson news agency.

”I would think that this continues to happen for the next few trading sessions for everything to kind of get flushed out.”

Rising interest rates in the U.S., Meixco and the UK were being blamed for Thursday's rout. 

“There’s some big-money players that have really leveraged to the low rates forever, and they have to unwind those trades,” Doug Cote, chief market strategist at Voya Investment Management was quoted by Bloomberg as saying. “They could be in full panic mode right now.”

The Bank of Mexico hiked key interest rate by 25 basis points on Thursday, although the move was expected. The decision was unanimous. Mexico now have rates at their highest level in nine years.

At the close of trading Thursday the Dow Jones Industrial Average was down 1,032.89 points or 4.15% at 23,860.46.

The Standard and Poor's 500 was off 100.66 points or 3.75% at 2,581, which means the index has now shed more than 10% from its record high on January 26. This places the S&P 500 formally in a correction.

The Nasdaq Composite was down 274.83 points or 3.9% at 6,777.16.

 “In the ‘old days,’ when good news was reported, the Stock Market would go up,” U.S. President Donald Trump in a tweet. “Today, when good news is reported, the Stock Market goes down.”

Mr. Trump was not alone in his sentiments. “There’s an element of truth in that yes, good news is prompting markets to reassess the loose monetary policy that has been in place the last 10 years,” Massud Ghaussy, director at Nasdaq Advisory Services told Bloomberg on Thursday. “As we’re seeing inflation pick up, as we see wage growth, as we see GDP growth kicking in, the Federal Reserve has no other choice but to essentially raise interest rates and normalize, and that will in turn shock the equity markets.”

Donald Selkin, New York-based chief market strategist at Newbridge Securities Corp., agreed. “It’s the most common thing that can halt a bull market,” he said. “The Fed sees economic activity picking up, and the demand for credit picks up, then they say ‘oh, we have to raise rates to cool things off a little bit.’

The Japanese yen, the U.S. dollar and the British pound gained ground in the wake of Thursday's stock market rout. The euro and the commodity currencies lost ground.

In early morning trade in Sydney on Wednesday the euro was trading just below 1.2250. The British pound was slightly higher than its New York close at 1.3921. The Japanese yen was stronger at 108.77, while the Australian dollar was considerably weaker at 0.7777. The Canadian dollar was fetching 1.2597, while the kiwi dropped like a stone to 0.7218.




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