Wall Street ends day substantially lower on risk aversion
Major equity indexes in the U.S. recorded heavy losses on Tuesday as investors, who came back to markets from the 3-day Labor Day weekend, reacted to escalating geopolitical tensions between North Korea and the United States.
The CBOE Volatility index .VIX, Wall Street's fear gauge, gained 2.25 point on the day to close at 12.38, suggesting that investors are staying away from risky assets. Moreover, safe-havens such as T-bonds, the JPY and gold received a substantial demand from market participants. In fact, the 10-year T-bond yield lost more than 4% and plummeted to its lowest level since June at 2.068%. Commenting on the market sentiment, "it looks as though escalation has gone to the next level, but there are lot of things in the coming weeks that may be causing people to get a little bit more cautious," Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, told Reuters.
Financials .SPSY fell to its lowest level in nearly four months as it lost 2.2% and became the worst-performing sector of the day.
After having lost more than 1% during the first half of the session, the S&P 500 was able to recover some of its losses in the late trading hours to close the dat 0.61%, or 15 points, lower at 2,459.25. The Dow Jones Industrial Average dropped 234.25 points, or 1.07%, to 21,753.11, and the Nasdaq Composite lost 59.76 points, or 0.93%, to 6,375.57.
Headlines from the U.S. session:
- Markets no longer view another hike in 2017 as likely - BBH
- WTI consolidates gains, up almost 3%
- Florida and Puerto Rico declared state of emergency due to Hurricane Irma
- Hurricane Harvey good for one thing at least - UOB
- Fed's Brainard: Ready to start shrinking balance sheet
- Fed's Brainard: Effects of Hurricane Harvey are expected to be short lived
- Fed's Kashkari: Fed's rate hikes may be causing ‘real harm’ to US economy
- US envoy to UN Haley: Iran nuclear deal was designed to be 'too big to fail'
- U.S. to continue deployment of defense assets to Korea - Yonhap
- ISM NY: Current Business Conditions came in at 56.6 in August, down from 62.8 in July