Wall Street saw its worst trading day in years on Monday as the Dow Jones industrial average plunged 1,175 points, marking the biggest daily point decline ever seen.
The collapse shaved 4.6 percent off the index, which represents a price-weighted average of 30 blue-chip American stocks that are generally the leaders in their industry.
The Dow also set an intra-day record drop of 1,600 points and at one point fell 800 points in a span of just 10 minutes.
The previous record drop in points took place on August 24, 2015, when the Dow plunged 1,089 points during the trading session. The biggest decline in percentage terms was on May 6, 2010, when the “flash crash” resulted in more than a 9 percent fall. Monday’s drop erased all gains by the Dow this year, with the index down 1.51 percent since January 1.
“A lot of people who have been in this market for the past three or four years have never seen this before,” said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas, as quoted by Reuters. “The psychology of the market changed today. It’ll take a while to get that psychology back.”
Bulls are saying that strong US corporate earnings, including a boost from President Donald Trump’s tax cuts, will result in the continued growth of US stock indices. Bears are expecting a market decline, saying it is over-stretched because of rising bond yields as central banks withdraw their easy money policies of recent years.
Markets across the world followed the US decline. During Tuesday’s trading, the Chinese Shanghai composite index plunged 3.35 percent, Japan’s Nikkei closed almost 5 percent down, key Western European indices fell almost 2 percent; Russia’s dollar-denominated RTS index was down 1.82 percent.
The turmoil on the US markets may deepen as Dow futures slipped by 400 points, or 1.7 percent, on Tuesday morning. They were down 800 points earlier.