Global Financial Meltdown: Investors Dump Nearly Everything Admist Worldwide Market Crash
Major Stock Market Indexes, Commodities, Currencies And Everything In Between Is Being Dumped By Investors Across The Globe In The Midst Of A Global Financial Meltdown.
The financial markets across the globe are facing one of the most massive sell-offs in recent memory.
The Dow Jones Industrial average has sold off over 467 points today. When and when you add that on top of 284 point drop following yesterday’s crash FED’s statement, which announced operation ‘twist’ and warned of significant downside risk and strains in global financial markets, we have a 751 point drop in the DOW since 2:45 PM est yesterday, which is the largest 2 day slump since 2008.
There are an endless parade of economic statistics many of which are the worse since the Great Depression and World War 2 era. We have also seen 111 of the s&P 500 hit fresh 52 week lows, a drop in global currencies – beside the dollar, oil dropping into the high $70 per barrel range and gold plummeting over 5% to trade in the low $1,700 per ounce range.
Business Week points out the massive crash in U.S. stocks immediately below while CNBC points out further below that this in fact a global meltdown – investors are dumping everything.
Dow Posts Biggest Two-Day Slump Since 2008 on Policy Concern
Sept. 22 (Bloomberg) — U.S. stocks tumbled, giving the Dow Jones Industrial Average its biggest two-day slump since December 2008, amid investors’ concern that policy makers are running out of tools to avoid another global economic recession.
The S&P 500 fell 3.3 percent to 1,128.84 at 1:16 p.m. in New York, slumping 7.1 percent in four days, its longest decline since Aug. 2. The Dow lost 401.50 points, or 3.6 percent, to 10,723.34. The MSCI All-Country World Index slid 4.5 percent, extending a drop from its May 2 high to more than 20 percent.
Between April 29 and Aug. 8, the S&P 500 fell 18 percent on concern about Europe’s debt crisis and an economic slowdown, closing within 29 points of a bear market, or a 20 percent drop. Since then, the index has risen 1 percent.
The S&P 500 yesterday fell the most in a month on the Federal Reserve’s assessment that the turmoil caused by Europe’s crisis is taking a toll on the economy. The Fed indicated willingness to do more to avoid a recession as it made the second move in as many months to lower borrowing costs. Stocks also fell as Moody’s Investors Service cut three U.S. banks.
“The storyline is that global growth is decelerating,” Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. His firm oversees $774 billion. “Financial stresses are rising and policy makers are finding few viable options to stabilize the real economy. When you’re concerned about recession risks, valuation takes a backseat.”
Global stocks fell on data that China’s manufacturing may shrink for a third month in September, the longest contraction since 2009, after a preliminary index of purchasing managers showed measures of export orders and output declined.
Stock futures extended losses after a Labor Department report showed that more Americans than forecast filed first-time claims for unemployment insurance payments last week. Meanwhile, U.S. consumer confidence dropped last week to the weakest point since the recession ended in June 2009, Bloomberg data show. Equities trimmed declines after an index of U.S. leading economic indicators rose more than forecast in August.
The Morgan Stanley Cyclical Index of companies most-tied to economic growth tumbled 4.5 percent. The Dow Jones Transportation Average decreased 2.9 percent. Caterpillar sank 6.1 percent to $74.54. DuPont declined 5.8 percent to $42.04. Alcoa slid 6.8 percent to $10.10, while Chevron sank 4.1 percent to $90.38.
Source: Business Week
Major indexes across the world have sold off in the neighborhood of 5% and no one knows when the blood bath will end. In fact, the only thing that is up is the U.S. Dollar with all other currencies and equities, including gold, being sold off in epic proportions.
Global Meltdown: Investors Are Dumping Nearly Everything
With no solution in sight for Europe and new fears of a global recession, investors dumped stocks and commodities and ran to the safety of U.S. Treasurys. Treasury yields , as a result, slipped to historic lows with the 10-year yielding 1.75 percent and the 30-year at 2.86 percent.
The dollar was also a beneficiary of a massive fear trade that sent U.S. stocks sharply lower, on the heels of steep sell-offs in equities markets around the globe.
The worst performing stock market sectors mirrored the sell-off in global commodities markets, with materials down 4.6 percent and energy stocks down 4.1 percent.
Copper, hit by concerns of a Chinese slowdown, tumbled 7 percent to a 1-year low. Gold, usually a safety play, was sold into the maelstrom as investors raised cash. The euro, broke below 1.35, a recent bottom of its range. It was trading in the 1.346 area, an eight-month low against the dollar. The dollar index was 1.4 percent higher.
“People are finding it really isn’t gold. It isn’t precious metals. It’s not currencies. U.S. Treasurys are where people are flocking to at a time of extreme concern about risk, and we continue to see Treasurys continue to get bid up,” said Zane Brown, fixed income strategist at Lord Abbett.
The selling in risk assets picked up momentum after the Fed’s statement Wednesday, in which it characterized risks to the economy as “significant” and noted that “strains in global financial markets” (or Europe) could be a catalyst. Then overnight, a preliminary China manufacturing data showed moderating growth.
The lack of resolution on Europe , however, remains the biggest culprit as investors worry the exposure of European banks to the sovereign crisis will kick off a global banking crisis. The EU, IMF and European Central Bank put off until October to determine what will be done about the next payment to Greece, without which it will default. Markets have been disappointed with the lack of a bigger plan of action from European leaders.
“I think it’s about the lack of leadership anywhere in the world. We’re seriously distressed about the lack of leadership and constant squabbling in Washington,” Brown said.
The animosity between political parties was once more in the headlines Thursday as the House defeated a spending billi that would keep the government running. Republican majority leader Rep. John Boehner said he expects the bill to pass and blamed Democrats.