The New York Stock Exchange invoked a rule saying market makers don’t have to disseminate price indications before the opening bell in an effort to make it easier and faster to open stocks on a volatile trading day.
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And it was all misery for other Asian markets again, with all major regional indexes closing in the red. S&P 500 futures dropped 74 points, or 3.78 % to 1897, while Nasdaq 100 futures plunged 208 points, or 4.96% to 3992.
The CBOE Volatility index, a measure of the premium traders are willing to pay for protection against a drop in the S&P 500, jumped as much as 90 percent to 53.29, its highest since January 2009. At the moment, the Dow, S&P 500 and Nasdaq indexes – America’s “Big 3” – are all in correction mode. This saw China’s main index – the Shanghai Composite – close at 8.5 percent down, after experiencing its worst day since August 2007.
European markets also took a hit on Monday, with the major indexes down roughly 5 percent.
The stock nosedive was touched off by what China’s state media is already calling “Black Monday”, in which markets there recorded their biggest one-day slide in eight years amid growing fears over an economic slowdown.
Stocks tanked at Monday’s start, with the Dow plunging more than 1,000 points to start the week, following the lead set by overseas markets as an intensifying rout persisted in all but assets viewed as safe havens.
Despite the scary plunge in the stock markets worldwide, economists believe that Bay Area companies that have charged to sturdy profits will continue to hire and expand their operations and revenue.
The Nasdaq composite shed 179.79 points, or 3.8 percent, to 4,526.25 points. (NASDAQ:CSCO) and McDonald’s Corporation (NYSE:MCD) lost more than 4 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 5.1 per cent to a three-year low.
“There is a lot of fear in the markets”, said Bernard Aw, market strategist at IG. That correction was caused by a combination of factors, one being the U.S. government near breach of its debt ceiling and subsequent credit-rating downgrade from Standard & Poor’s, as well as fears about Greece’s financial condition.
Worries about China’s slowing economy and reduced demand by the world’s second-biggest economy for commodities had pushed the price of crude oil below $40 a barrel.
Commodity markets couldn’t escape the bloodletting as crude prices sank to fresh six-year lows. Among blue-chip Dow components, Cisco Systems was off 3.4 per cent, Chevron fell 2.9 per cent, Disney declined 1.4 per cent, JPMorgan Chase lost 3.1 per cent and Wal-Mart Stores dropped 2.0 per cent.
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“My biggest concern is that global growth momentum is very fragile”. The stock later recovered to trade at $105.37, down less than 1 percent. Yields for the 10-year bonds dropped below 2 percent for the first time since April.
