US stocks on Friday tumbled like a house of cards, lowering down the Dow Jones Industrial Average by approximately 400 points. This is the biggest blow recorded by the US stock market since the Brexit vote in June this year.
Telecommunications, utilities and raw material companies’ stocks have slumped as the investors reached out for gains. Owing to the downturn in the crude oil prices, even the energy stocks traded low.
With interest rates playing a key role in the US’s extended market rally, the stock prices fell amidst speculations that the central bank may increase the interest rates. These speculations were further fueled when the president of Federal Reserve Bank remarked that an increase in interest rates might be inevitable.
As a result, the Dow Jones Industrial Average lost 394 points and stood at 18,085, bearing a loss of 2.1%. The S&P 500 index fell 53 points to halt at 2,128, losing 2.5%. The NASDAQ Composite Index also fell 134 points and stood at 5,126, again a loss of 2.5% which has otherwise recorded highest closings on Tuesday as well as on Wednesday.
According to Eric Rosengren, the president of Federal Boston Bank, the Central bank has an obligation to the increase of the key interest rates. And he says that this is going to happen pretty soon.
A policy meeting is scheduled to be held by the Fed later this month, and a decision is likely to be made during the session. Close observers of the Fed are anticipating that the interest hike is going to take place around mid-December.
Irrespective of the outcome of the decision, stock prices have already started tumbling down. Many of the oil production and gas generation companies along with drilling companies had to compensate for the losses of Friday from the gains achieved on Thursday.
One of the companies that saw a major downfall in the stock price was Diamond Offshore Drilling (NYSE:DO) losing $1.23. At a 10% loss, its stock price fell to $15.67. Following the same path were Transocean (NYSE:RIG) and Marathon Oil (NYSE:MRO) which lost $0.62 (5.9%) and $1.01 (6.1%) and ended at a lowered stock prices of $9.85 and $15.73, respectively.
Oil Prices: Oil prices fell after gaining good yields on Thursday. Benchmark crude ended at $46.01 losing $1.63 (3.4%). Brent crude went down by $1.83 closing at a barrel price of $48.16 losing 3.7%
Bond Prices: Bond prices also fell after recording an increase on Thursday. Treasury bond’s 10-year dividend yield which went up from 1.60% to 1.67% on Thursday, slumped yesterday.
Gold and Silver Prices: Gold prices were down by $7.10 closing at $1,334.50 an ounce, while silver closed at $19.37 an ounce, losing $0.31.
Even the high dividend yielding stocks from telecoms and utilities sector were no exception. AT&T (NYSE:T) lost $1.41 per share and came down to $39.18, a loss of 3.4%. Verizon (NYSE:VZ) on the other hand lost $1.77 and ended up at $51.84, bearing a loss of 3.3%.