- Title: Dow posts biggest one-day drop since October as recession fears take hold
- Date: 14th August 2019
- Summary: SANTA MONICA, CALIFORNIA, UNITED STATES (AUGUST 14, 2019) (REUTERS VIA SKYPE) (SOUNDBITE) (English) GERBER KAWASAKI CEO, ROSS GERBER, SAYING: "Well I think you should take it very seriously, the bond market is rarely wrong. So I don't like to bet against the bond market. I think the bond market is making a very clear statement right now, which is trade wars are horrible for the global economy and Trump's 'America First' policies are maybe good in some ways for America on the short term but really bad for America and the global economy on the long term. And we're finally starting to see this rollover on top of all of the problems we're seeing between Hong Kong and then Brexit coming and the EU's economy being a disaster. I mean, it's just hard to jump up and down and say, 'Wow look at how great the economy is right now.' And that's what the bond market is saying is, maybe the U.S. economy is strong today, but in a year, maybe it's not going to be."
- Embargoed: 28th August 2019 21:29
- Keywords: Wall Street the Dow largest one-day point drop since October 2018 recession U.S. Treasury yield curve temporarily inverted for the first time in 12 years
- Location: NEW YORK, NEW YORK + SANTA MONICA, CALIFORNIA, UNITED STATES / INTERNET
- City: NEW YORK, NEW YORK + SANTA MONICA, CALIFORNIA, UNITED STATES / INTERNET
- Country: USA
- Topics: Economic Events,Equities Markets
- Reuters ID: LVA003AS6Y9TZ
- Aspect Ratio: 16:9
- Story Text: Wall Street sold off sharply on Wednesday (August 14) as recession fears gripped the market after the U.S. Treasury yield curve temporarily inverted for the first time in 12 years.
All three major U.S. indexes closed down about 3%, with the blue-chip Dow posting its biggest one-day point drop since October after 2-year Treasury yields surpassed those of 10-year bonds, which is considered a classic recession signal.
Dire economic data from China and Germany suggested a faltering global economy, stricken by the increasingly belligerent U.S.-China trade war, Brexit woes and geopolitical tensions. Germany reported a contraction in second-quarter gross domestic product, and China's industrial growth in July hit a 17-year low.
Wednesday was the first time that yields for 2-year and 10-year Treasuries had inverted since June 2007, months before the onset of the great recession, which crippled markets for years. The U.S. yield curve has inverted before every recession in the past 50 years. The CBOE volatility index, a gauge of investor anxiety, jumped 4.58 points to 22.10.
The Dow Jones Industrial Average fell 800.49 points, or 3.05%, to 25,479.42, the S&P 500 lost 85.72 points, or 2.93%, to 2,840.6, and the Nasdaq Composite dropped 242.42 points, or 3.02%, to 7,773.94.
(Production: Fred Katayama / Roselle Chen) - Copyright Holder: REUTERS
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