Dow set to tumble as sinking Treasury yields raise ‘fear factor’ of trade war

U.S. stocks tumbled sharply at the open Wednesday, relinquishing the previous session’s healthy rebound and them some, as a number of global central banks adopted easy-money policies in the face of an intensifying trade conflict between Beijing and Washington.

How did benchmarks perform?

The Dow Jones Industrial Average DJIA, -1.82% fell nearly 568 points, or 2.2%, to 25,459, the S&P 500 index SPX, -1.50% lost 54 points, or 1.9%, at 2,826. Meanwhile, the Nasdaq Composite Index COMP, -1.22%  shed 1.6% to 7,705, a drop of 128 points.

On Tuesday, the Dow rose 311.78 points, or 1.2%, to end at 26,029.52, while the S&P 500 index climbed 37.03 points, or 1.3%, to close at 2.881.77, while the Nasdaq Composite Index COMP, -1.22% surged 107.23 points, or 1.4%, to finish at 7,833.27.

What’s driving the market?

U.S. equity markets fell sharply at the start of trade on Wednesday, with stocks giving up gains as U.S. Treasury and European government bonds plumbed fresh yield lows. The 10-year Treasury TMUBMUSD10Y, -5.02%  fell below 1.70%, falling to an intraday nadir at 1.60%, around the lowest since late 2016, while comparable German bonds TMBMKDE-10Y, -12.42%  hit a record low at negative 0.59%.

“A sharp decline in yields as the 10-year note falls under 1.65%. This is raising the ‘Fear Factor’ over the impact of the trade war on the economy,” Peter Cardillo, chief market economist at Spartan Capital Securities told MarketWatch.

Adding to market jitters is growing fears of a recession in the U.S. against a weaken economic backdrop throughout the globe.

Central bank’s in India and New Zealand (as well as the Thailand) lowered their domestic interest rates to levels that are lower than had been expected, highlighting anxieties centered on the health of the world-wide economy.

India’s central bank cut its key interest rate

Read More Here...

Bookmark the permalink.