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Wall Street reels as Dow Jones falls over 800 points

Wall Street worries about an economic slowdown as US stocks fall.

IG Analyst

Publication date : 2018-12-04T22:04:24+0000

Wall Street sign

Source: Bloomberg

Wall Street is down after plunging 800 points in a single trading day. The fall is sparking fears of an economic slowdown.

The US-China trade trouble

While the US stock market soared on the news of a possible US-China trade truce, the delay in implementing the deal is worrying investors. The two nations promised that they wouldn’t impose additional tariffs on each other’s imports until January. However, neither side has given specifics on the agreement, sparking scepticism that the pact will even be honored. US President Trump also added further doubt when he tweeted that if future negotiations don’t go well, he’ll become a ‘Tariff man.’

Yield curve worries

Wall Street and the US dollar are also struggling because of the inversion of the yield curve.The yield on three-year US government debt is more than the interest rate on five-year debt. That has usually been a sign that investors have more faith in the economic situation now than in the future. The inverted curve has previously come before recessions, which is worrying investors.

Art Hogan, chief marketing specialist at B.Riley FBR, noted that both the US-China trade impasse and the inverted yield curve have contributed to Wall Street’s struggles.

‘No good deed goes unpunished. As we get headwinds from trade worries fading, you get an inverted yield curve and another brick added to the market's wall of worry,’ said Hogan.

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