Dow Crashes Nearly 300 Points as Bond Yields Reignite Recession Fears

The Dow and broader U.S. stock market plunged anew on Thursday, as the latest fallout in the China trade saga drove investors into the perceived safety of government bonds. As a result, the yield on the 10-year U.S. Treasury fell below the yield on the three-month T-bill for the first time since May 15.

Dow Crashes’ S&P 500, Nasdaq Follow

All of Wall Street’s major indexes headed for major losses on Thursday, which put the Dow Jones Industrial Average on track for its fifth consecutive weekly drop. The blue-chip index declined by as much as 448 points before paring losses in afternoon trading. It settled down 286.14 points, or 1.1%, at 25,490.47.

Dow Jones Industrial Average
Dow Jones Industrial Average pares losses but still finishes down 286 points on Thursday. | Source: Stockcharts.com.

The broad S&P 500 Index of large-cap stocks plunged 1.2% to close at 2,822.24. Losses were broad and far-reaching, with nine of 11 primary sectors finishing in negative territory. Energy stocks plunged more than 3%. Six other sectors fell by at least 1%.

The technology-focused Nasdaq Composite Index declined 1.6% to finish at 7,628.28.

Bond Yields Plummet

The U.S.-China trade saga Thursday resulted in a mass exodus from stocks and into government bonds, sending Treasury yields plummeting.

The yield on the benchmark 10-year U.S. Treasury note reached 2.296%, the lowest since late 2017. As The Wall Street Journal reported, the benchmark yield has once again fallen below the yield on the three-month Treasury bill. Read about why that’s a big deal.

Investors hoping for a quick resolution to the U.S.-China trade dispute were let down Thursday after a spokesperson for Beijing’s Ministry of Commerce called on Washington to address its wrongful actions.

“If the U.S. would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue,” Ministry of Commerce spokesperson Gao Feng said, according to CNBC.

President Trump reignited the tariff war earlier this month after China backed out of a trade deal. China then responded by issuing new tariffs of its own targeting U.S. imports.

Oil Prices Head for Worst Day in Six Months

Crude oil sold off sharply Thursday and headed for its worst slide in six months amid rising U.S. inventories and concerns around global economic growth.

The U.S. West Texas Intermediate (WTI) benchmark crashed below $60 a barrel for the first time since March. The contract bottomed at $57.33 a barrel on the New York Mercantile Exchange. It was last seen trading at $57.78 a barrel, down $3.65, or 5.9%.

West Texas Intermediate
A combination of factors send crude prices sharply lower as WTI crashes below $60 a barrel in New York Trading. | Source: Barchart.com.

Brent international crude futures reached a low of $67.02 a barrel on London’s ICE Futures exchange. It was last down $3.46, or 4.9%, at $67.53 a barrel.

Featured image courtesy of Shutterstock. Charts via Stockcharts.com and Barchart.com. 

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi