Published: Wed, February 07, 2018
Economy | By

Dow Plunges 1175, The Biggest Point Drop In History

Dow Plunges 1175, The Biggest Point Drop In History

During Monday's roller-coaster trading on Wall Street, at its lowest ebb, the Dow was down 1,597 points from Friday's close.

USA stock futures traded lower in early pre-market trade, ahead of earnings reports from several companies.

Michael Hewson, chief market analyst at CMC Markets UK, said the stock market falls had been "a long time coming". At one point during the trading day the Dow had fallen by almost 1,600 points.

The Nasdaq composite rose 148.36 points, or 2.1%, to 7115.88.

Shares tumbled in Asia on Tuesday morning after a wild day for United States markets that resulted in the biggest drop in the Dow Jones industrial average in six and a half years.

The drop in early trading Tuesday marked the third straight day of steep declines.

Christian Hille, a senior fund manager at Deutsche Asset Management in Frankfurt, said that much of the selling was by investors compelled to move out of stocks for technical reasons - for example, because they manage a fund that has an obligation to limit losses to 2 or 3 per cent. That raised the alarm about higher inflation and, with it, potentially higher interest rates.

Dow Jones industrial average climbs more than 100 points, recovering from an early plunge of more than 500 points.

On Monday, the Dow finished down 4.6 percent while the S&P 500 sank 4.1 percent, to 2,648.94.

Happily, the markets went on to surge by 350 points, helping it rise 1.4 percent over its opening price. Bears have begun to cheer the beginning of the end of the bull market, while optimists are questioning whether the selloff was just a pullback needed to fuel the markets higher once again. He said traders are still jittery about jumping back in.

"You also have a surrounding environment with bitcoin and other things that are showing individual levels of volatility as well, so interest rates hitting new recent highs, when you are up this high, I think there is an emotional component, the percentage drops aren't so unique but when you translate them into points you know it has an emotional impact on investors". Overnight, Japan's Nikkei index fell 4.7 percent, its biggest drop since June 2016.

"However once this kind of stampede starts it's hard to stop".

The previous largest point drop for the Dow was 778 points in September 2008, in the midst of the financial crisis.

That has fed into widespread concerns that markets were stretched following a strong run over the past year that pushed many indexes to record highs.

Tokyo's benchmark ended 4.7% lower at 21,610.24. The more domestically focused FTSE 250 index has declined 2.2 per cent, while the broader FTSE All Share index is showing a loss of 2.1 per cent.

In Europe, Germany's DAX fell 2.3 percent and the CAC 40 in France lost 2.3 percent. In November 2012, Trump tweeted, "The stock market and USA dollar are both plunging today".

While there was no particular piece of news that pushed major US indexes deep into the red on Monday, the recent moves in the have added volatility and concern to the market.

Stephen Schwarzman, the chairman and CEO of financial firm Blackstone, warned recently of a potential "reckoning" in markets.

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