Stocks took a huge tumble on Monday, as the Dow plunged almost 1,175 points, which is the biggest point decline in history during a trading day, Bloomberg reported.
U.S. stocks plunged the most in 6 1/2 years, with the Dow Jones Industrial Average sinking more than 1,175 points; the equity selloff reached a fever pitch amid rising concern that inflation will force interest rates higher.
At one point during the trading day it declined more than 1,500 points before recovering slightly.
This dip wiped out all gains made in 2018, shortly after a record was set on January 26th, when the Dow Jones Industrial Average closed at 26, 616.
Trading volume was almost double the 30-day average. All but two stocks in the broad gauge declined, Bloomberg reported.
“I think sentiment was a little too optimistic… what was driving the market up in January? It wasn’t the fundamentals, as good as they were, it was excessive confidence”, Bloomberg reported Brad McMillan, chief investment officer for Commonwealth Financial Network explaining.
“People are dealing with the shock of seeing real inflation for the first time in a while,” said Bruce McCain, chief investment strategist at Key Private Bank, as reported by CNN money.
The White House said in a statement that President Trump was focused on “our long-term economic fundamentals, which remain exceptionally strong.” The statement cited strengthening economic growth, low unemployment and increasing wages for workers.
Elsewhere, oil extended declines after U.S. explorers raised the number of rigs drilling for crude to the most since August.
Treasuries popped, sending the 10-year yield down more than 10 basis points, and gold future pushed higher; copper climbed the most in a week. The dollar stabilized while the yen advanced.
While Friday’s market rout came amid U.S. wage data on Friday that pointed to quickening inflation, which would lead to higher rates and, in turn, rising borrowing costs for companies, the selling Monday came amid few major data points.
“ This is classic risk off that may not end any time soon,” says Win Thin, head of emerging-market currency strategy at Brown Brothers Harriman.
“When stocks reach new highs month after month, when a virtual currency is the hottest thing in town, greed has overtaken fear. And when that happens, well, it’s time to be fearful again. Consider this a wake-up call”, USA today reported Axel Merk, chief investment officer at San Francisco-based Merk Investments, as saying.
Stocks simply had too many buyers at the start of the year. In fact, more than $100 billion flowed into stocks globally at the beginning of 2018, according to Bank of America/Merrill Lynch data.
By Howard Wolf