[New York Close] Dow Drops Over 2000 Points... Largest Decline Since 2008

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The U.S. New York stock market collapsed futilely on the 9th (local time), recording the worst decline since the 2008 financial crisis.

On that day, the New York stock market experienced a commotion as trading was halted immediately after opening due to the added negative factors of concerns over the novel coronavirus infection (COVID-19) and the plunge in oil prices. Circuit breakers, which stop trading to stabilize the market, were triggered for the first time since 1997, but their effect was minimal.

The Dow Jones Industrial Average plummeted 7.79% (2013.76 points) to close at 23,851.02, the S&P 500 index fell 7.60% (225.81 points) to 2746.56, and the Nasdaq index dropped 7.29% (624.94 points) to finish at 7,950.68.

The energy sector, which directly suffers from the oil price decline, and bank stocks, which faced growing concerns over loan defaults in the energy sector, both plunged together.

Investors flocked to bonds instead of stocks. On that day, the yield on the 10-year U.S. Treasury bond fell to an intraday record low of 0.318%. A decline in Treasury yields means a rise in bond prices. As Treasury yields approached zero, market expectations for additional interest rate cuts or quantitative easing (QE) by the Federal Reserve (Fed) increased further.

The Chicago Mercantile Exchange's FedWatch even predicted the possibility that the Fed might lower the benchmark interest rate to zero this month. Just last Friday, the probability of a rate cut to 0.5?0.75% was 71%, but on this day, the chance of lowering the rate to 0.25?0.5% was 60.9%. The expectation that the rate would be set at 0.0?0.25% was also as high as 39.1%. The forecast for a 0.25% 'baby step' rate cut disappeared entirely. The current U.S. benchmark interest rate is 1.0?1.25%. If the FedWatch forecast holds, the Fed is poised to implement another 'big cut' in interest rates.

Oil prices also plunged in the U.S. market. West Texas Intermediate (WTI) crude oil for April delivery on the New York Mercantile Exchange (NYMEX) closed at $31.13 per barrel, down 24.6% ($10.15) from the previous trading day. Brent crude for May delivery on the London ICE Futures Exchange also plunged 26.18% ($11.85) to $33.42 per barrel. Both WTI and Brent crude prices fell more than 30% at one point during the day.

International gold prices rose slightly, with April delivery gold increasing 0.2% ($3.30) from the previous day to $1,675.70 per ounce.

This content was produced with the assistance of AI translation services.