U.S. stocks dropped in a rapid selloff on Monday, with the Dow falling nearly 1,600 points at its low in its biggest intraday point drop in history, while U.S. Treasury yields receded from four-year highs.
Stocks’ fall added to last week’s pullback from record highs in the indices. During the session, the Dow briefly fell more than 10 per cent from its Jan. 26 record, with the index down as much as 6.3 per cent at one point.
Wall Street indexes closed off the lows of the day but the Dow and S&P 500 both fell more than 4.0 per cent, posting their biggest daily percentage drops since August 2011 and erasing their gains for the year. The Dow is now down 8.5 per cent from its record and the S&P 500 is down 7.8 per cent since then.
“It looks to me like a typical type of scenario when you see a single stock flash crash where you’ll see bids just disappear, stop orders get kicked,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. “The overall market could have taken a cue from some of the bigger names.”
The CBoe Volatility index closed at its highest since August 2015.
WATCH: Trump says 2018 ‘off to a very great start’ with tax cut, stock market
Selling hit all S&P sector, though the S&P financial index , down 5.0 per cent, was the biggest daily percentage decliner, followed by healthcare, down 4.6 per cent. Oil prices settled more than 1.0 per cent lower, pressured by rising U.S. output and other factors.
The Dow Jones Industrial Average fell 1,175.21 points, or 4.6 per cent, to 24,345.75, the S&P 500 lost 113.19 points, or 4.10 per cent, to 2,648.94 and the Nasdaq Composite dropped 273.42 points, or 3.78 per cent, to 6,967.53.
The pan-European FTSEurofirst 300 index lost 1.51 per cent and MSCI’s gauge of stocks across the globe shed 2.96 per cent.
U.S. Treasury yields fell from four-year highs after the selloff in equity markets sparked demand for the low risk debt.
Benchmark U.S. 10-year note yields surged to 2.885 per cent overnight, the highest since January 2014, following data Friday that showed hourly wages rose in January.
The 10-year notes were last up rose 38/32 in price to yield 2.7093 per cent, down from 2.852 per cent late on Friday.
Signs that U.S. inflation is edging up have raised some traders’ expectations that the Federal Reserve may hike interest rates four times this year. Fed officials have indicated that three rate hikes are likely.
The U.S. dollar rose against a basket of currencies as the U.S. bond market selloff leveled off.
The dollar index rose 0.45 per cent, with the euro last down 0.61 per cent to $1.2384.
In commodities, U.S. crude fell 1.99 per cent to $64.15 a barrel, while Brent fell 1.4 per cent to $67.62.
Spot gold steadied at $1,334.40 an ounce.
— Additional reporting by Lewis Krauskopf and Karen Brettell in New York; Alasdair Pal in London and Wayne Cole and Swati Pandey in Sydney; Editing by Larry King and Nick Zieminski