Stock Market News For Aug 13, 2019
Zacks Investment Research | Aug 12, 2019 10:01PM ET
Wall Street closed sharply lower on Monday following intensification of U.S.-China trade dispute, heightened geopolitical issues and concerns about a global economic slowdown. Investors opted for safe-haven government bonds to a large extent resulting in significant decline in sovereign bond yields. All three major stock indexes plunged on Monday.
The Dow Jones Industrial Average (DJI) tumbled 1.5% or 391 points to close at 25.896.44. The S&P 500 declined 1.2% to close at 2,882.44. Meanwhile, the Nasdaq Composite Index closed at 7,863.41, shedding 1.2%. The fear-gauge CBOE Volatility Index (VIX) jumped 17.4% to close at 21.09. A total of 6.09 billion shares were traded on Monday, lower than the last 20-session average of 7.24 billion. Decliners outnumbered advancers on the NYSE by a 2.33-to-1 ratio. On Nasdaq, a 2.10-to-1 ratio favored declining issues.
How Did The Benchmarks Perform?
The Dow closed in negative territory for the second straight day with 29 components of the 30-stock blue-chip index closing in the red while one finished in the green. The S&P 500 also closed in negative territory for second consecutive day. The Financials Select Sector SPDR (XLF) and Materials Select Sector SPDR (XLB) lost 1.9% and 1.6%, respectively. Notably, all 11 sectors of the benchmark index closed in the red. The Nasdaq Composite declined for the second successive day due to weak performance from large-cap stocks.
Yields on U.S. Government Bonds Plunge
On Aug 12, yield on the benchmark 10-year US Treasury Note plummeted 9.1 basis points to 1.64%, its lowest since October 2016. The 2-year US Treasury Note yield dropped 5.1 basis points to close at 1.578%. Meanwhile, the yield on long-term 30-year US Treasury Note plunged 11.1 basis points to 2.13%. This government bond is only three basis points away from its all-time low set in July 2016. However, the short-term 3-month Treasury Bill is currently yielding around 2%.
Several economists consider inversion between the 3-month and 10-year bond yields as a clear indication of an upcoming recession. However, a more powerful indicator is the yield inversion between 2-year and 10-year U.S. Treasury Notes., which is currently just 6 basis points away to take an inverted shape.
Falling yields resulted into sharp decline of shares of major banks. The Goldman Sachs Group Inc. (NYSE:GS) , Bank of America Corp. (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) plummeted 2.6%, 2.4% and 1.9%, respectively. All three stocks carry a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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