The Strategist

August 14th becomes the worst day for the American stock market since the beginning of 2019

08/15/2019 - 10:21

US stock indexes closed trading on Wednesday with a fall of about 3%, showing the worst dynamics since the beginning of the year due to fears of a recession in the United States, as well as weak statistics from Germany and China.

During the Wednesday trading, the yield on two-year US government bonds rose above the yield on the standard 10-year US Treasuries for the first time since 2007. This situation, known as the inversion of the yield curve, is considered a signal of an imminent recession in the country since it preceded the last five economic downturns in the United States.

The decrease in the yield of long-term US government bonds is also explained by the high demand for these securities, because the yield on bonds of other developed economies, including Japan and most European countries, is below zero.

All 30 companies, whose shares are included in the calculation of the Dow Jones index, fell on Wednesday. In addition, only three companies from the S&P 500 index were able to complete trading in positive territory: Newmont Gold stock quotes increased by 0.8% amid rising gold prices, the capitalization of Ventas increased by 0.3%, and the market value of Evergy Inc. , also operating in the renewable energy sector, rose by less than 0.1%.

JPMorgan Chase fell by 4.2%, oil giant ExxonMobil - 4%, and road equipment and mining equipment manufacturer Caterpillar – by 3.2%.

Shares for the online furniture store Wayfair Inc. fell by 10% after news that the company plans to place bonds worth $ 750 million.

Papers of manufacturer of popular down jacket Canada Goose fell by 7.5% in New York. The company increased its loss in the first fiscal quarter, despite strong revenue growth.

Capitalization of Macy's Inc. Department Store Network collapsed by 13%, as the company reported a worse-than-expected profit for the second financial quarter and lowered its annual profit forecast.

On August 14, the Dow Jones Industrial Average fell by 800.49 points (3.05%) to 25479.42 points.

Standard & Poor's 500 fell 85.72 points (2.93%) to 2840.6 points.

Nasdaq Composite lost 242.42 points (3.02%) and showed 7773.94 points.