The U.S. markets spent much of the morning shifting between small gains and losses on Tuesday, with declines in energy companies, the tech sector and banks.
By Paolo Palazzi-Xirinachs
Tuesday, February 9, 2016
The financial sector has taken the biggest beating this year, falling 15%, as fears of a recession compounded concern about banks' exposure to the energy sector and expectations that interest rates are unlikely to rise quickly. Near midday, the Dow Jones industrial average was down 0.36%, the S&P 500 was down 0.37%, while the Nasdaq composite index was down 0.3%.
As the financial markets have lurched these past two weeks, signals that central-bank officials are prepared to add to stimulus if needed have added little calm to investor anxiety a day before Federal Reserve Chair Janet Yellen testifies before Congress.
U.S stock markets have endured a volatile start to the year as investors have fretted over a number of issues, including the fall in the price of oil to multiyear lows, a slowdown in China and whether many parts of the global economy would fall into recession and suffer a debilitating period of deflation. Global equities have now lost about $6 trillion since the start of the year. In January, that was largely because of worries over the slowdown in China and the slump in the price of oil. Additionally, global stocks are on the precipice of a bear market as a fresh slide in crude and the perceived creditworthiness of European banks added to doubts about the strength of the worldwide economy.
Perhaps more remarkable than the stock market reverses both in the U.S. and in the world’s major indices was news that the interest rate on Japan’s benchmark 10-year bond became negative for the first time in history. The yield on the country’s 10-year bond fell 0.05% points to minus 0.03%. That essentially means investors are willing to pay for the right to lend money to Japan over that time period. One reason they might do so is because Japanese bonds are considered safe. By contrast, the equivalent bond rate for the United States is 1.74%, also very low in historical terms.
This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.