Stocks on Wall Street fall 500 points amid recession fears

Friday, 09 Aug, 2019

Dow Jones prices nosedived at a time of heightened volatility in the financial markets with the pan-European Stoxx 600 falling by nearly 2 percent - on top of a 2.5 percent drop seen on Friday, the worst performing day for it in 2019. All three major indexes pared losses in the afternoon session with the S&P 500 and the Nasdaq ending the day at green territory. That sent bond yields sharply lower.

The Treasury held an auction for 10-year notes at a rate of 1.670%.

Brent crude oil tumbled to $US57.40 per barrel.

Traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) on August 6, 2019 in the Brooklyn borough of New York City.

Asian markets were calmer Wednesday as central banks across the region moved aggressively to shore up slowing economic growth. That essentially means investors lose money just for the privilege of parking their cash in what are considered safe assets.

Banks sustained some of the worst losses Wednesday.

The Reserve Bank of India slashed its key lending rate to the lowest level in nine years, a move the central bank said was needed to boost growth and private investment. Wells Fargo gained 1.7% and Bank of America rose 1.2%. Brent crude, used to price worldwide oils, rose $1.53 per barrel in London to $57.76. Benchmark U.S. crude plunged 4.6% at $51.16 a barrel.

The only weak spots in the market were energy and materials stocks. Occidental Petroleum gave up 4.9%.

Some investors saw the big drops Wednesday morning as an opportunity to buy stocks at cheaper prices.

Likewise, the benchmark S&P 500 spent most of its day in the red - but managed to stage a turnaround in the final hour, lifting 0.1 per cent. It was down as much as 589 earlier.

But China's decision to allow its currency to stabilize Tuesday suggests Beijing might hold off from aggressively allowing the yuan to weaken as a way to respond to USA tariffs on Chinese goods.

Stocks in the USA and other parts of the world advanced after China's central bank chose to fix the midpoint for onshore yuan trading at a rate just above 7 a dollar, slightly higher than analysts had been expecting and a sign the country is avoiding escalating tensions with the US - for now. The Nasdaq fell 309 points, or 3.9%, to 7,694.

USA sharemarkets have rebounded driven by optimism that currency tensions between the United States and China would ease.

The CBOE volatility index, known commonly as the VIX or Wall Street's "fear gauge", hit its highest level since mid-May, while Europe's equivalent reached its highest point since early January.

Gold touched a six-year high of $1,489.76 per ounce.

A government report suggesting a cooling US job market kept bond yields in check after an early gain. Profit for companies in the S&P 500 is now expected to contract by roughly 1 percent.

The S&P 500 fell 51 points, or 1.8%, to 2,880. It bought Fox's entertainment business in March for $71 billion.

Solid earnings results helped lift other sectors. The company reported a surge in Tinder subscribers and raised its revenue forecast for the year.