THE Dow Jones Industrial Average posted its largest slump of the year sparking fresh fears of an impending global recession.
The all-important financial market – which indicates the total value of 30 publicly owned US companies – dropped by more than 800 points in a day.
Wednesday’s three per cent fall was sparked by sharp declines in economically sensitive industries like banking and manufacturing, say experts.
The value of Citigroup, one of the America’s biggest banks, dropped 5.3 per cent while the value of aviation giant Boeing slipped by 3.7 per cent.
Elsewhere the broader S&P 500 market also sank also by three per cent and is now more than six per cent below its July peak.
Oil values sank by five per cent, however there was some good news as the so-called safe havens like gold and the dollar did rise slightly.
Weak economic data from Germany and China also added to recent signals of the world-wide slowdown.
That spooked investors, who responded by dumping stocks, sending the Dow Jones into its biggest drop of the year.
“Whether we go into recession now or we don’t, it’s not a good sign,” Michael Farr, president of investment firm Farr, Miller & Washington told the WSJ.
“You’re going to see investors temper their enthusiasm more seriously today.”
Dire economic data also suggested a faltering global economy, stricken by the increasingly belligerent US-China trade war, Brexit woes and geopolitical tensions.
Germany reported a contraction in second-quarter gross domestic product, and China’s industrial growth in July hit a 17-year low.
“It was all negative and not much positive today,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
“We’re outside of the earnings season and markets are being batted around by news.”
Uncertainty about the outcome of the US trade war has spurred a return of volatility to the stock market throughout August.
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However, Donald Trump took to Twitter to defend his trade policy Wednesday, saying: “We are winning big time, against China.”
But many on Wall Street remain worried that the trade war between the world’s two largest economies may drag on through the 2020 US election and cause more economic damage.
“We still see a substantial risk that the trade dispute will escalate further,” said Mark Haefele, global chief investment officer at investment bank UBS in a note to clients.
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