Dow Jones hit by biggest single-day points drop ever

Volatility roils financial markets as Dow declines 4.6 per cent, largest decline since 2011

Jeremy B. White
San Francisco
Monday 05 February 2018 22:10 GMT
Fox News cuts away from Donald Trump's speech to give urgent update as Dow Jones plunges

The Dow Jones industrial average plunged by 1,175 points, its largest single-day points drop in history.

Newfound market volatility has shattered what had been a long period of stability and mounting value. The Dow's dive erased gains for the year so far and extended a multi-day slump that saw the Dow drop by some 600 points on Friday.

In addition setting a new record for number of points dropped in a day, the Dow's 4.6 per cent decline in value was the most substantial since 2011. It was still less severe than declines during market-rocking events like the 2008 financial crisis, when the Dow shed 7 per cent of its value in its worst single-day hit.

Earlier in the day the Dow had plummeted by nearly 1,600 points before recovering much of that value. It has swung some 2,100 points in the last week of trading, a slide approaching 8 per cent.

In addition to the Dow shedding value, the Standards and Poor 500 (S&P 500) index and the Nasdaq both saw declines of around 4 per cent. The S&P 500 declined to about 7.8 per cent below its all-time high.

With thriving markets toppling records in recent months, some analysts said the pullback was all but inevitable. After cresting to a record high in January, the Dow has retreated by 8.5 per cent from that apex.

“It's like a kid at a child's party who, after an afternoon of cake and ice cream, eats one more cookie and that puts them over the edge,” David Kelly, the chief global strategist for JPMorgan Asset Management, told the Associated Press.

Still, the spiralling markets injected uncertainty that could have political repercussions. The Dow's oscillations undercut one of Donald Trump’s central arguments for the success of his presidency.

In tweets and in speeches, the President has repeatedly trumpeted surging stocks as a sign that his tenure has unleashed economic prosperity. Last week, the White House distributed a press release touting that the Dow had closed at record highs more than 70 times under Mr Trump.

“The stock market has smashed one record after another”, Mr Trump said in his State of the Union speech last week, calling the trend “great news for Americans' 401k, retirement, pension, and college savings accounts”.

The White House released a statement downplaying the turbulence, saying “The President's focus is on our long-term economic fundamentals, which remain exceptionally strong” and pointing to low unemployment and rising wages.

“The President's tax cuts and regulatory reforms will further enhance the US economy and continue to increase prosperity for the American people,” the statement said.

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