After a Goldman miss and a yield spike, tech banks on Wall Street are on the verge of a meltdown. The market has been in free fall for the past several months, with the New York Stock Exchange (NYSE) crashing nearly 10% on Monday. In response, investors are dumping their stocks on other exchanges. Listed companies on the NYSE have a combined market value of US$30.1 trillion, and the NASDAQ is the world’s largest stock exchange.
After Goldman Sachs’ report, financial stocks are taking a beating. The firm missed its quarterly profit forecast, pushing its stock down 7.3%. The S&P 500’s financial sector was the worst performing sector. Meanwhile, benchmark U.S. Treasury yields soared to two-year highs and topped 1%, as traders braced for more aggressive action by the Federal Reserve.
The news that Goldman missed earnings weighed on the financials, and the sell-off in tech stocks followed. However, the sell-off in technology shares did not stop at the bank. In fact, after Goldman’s miss, the entire technology sector dragged the financials sector down. As a result, benchmark U.S. Treasury yields hit two-year highs, as traders braced for aggressive action by the Federal Reserve.
The Dow tumbles more than 700 points, posting a record-low. Oil sinks to an 18-year low, boosting the S&P 500 and Dow. In addition, oil prices slump a second consecutive day as the U.S. Congress delays a production cut. The 30 year Treasury yield hits an all-time low of 1.89% on 21 February.
As the market falls, the Dow Jones drops over 700 points. The S&P 500 continues to rise despite concerns over inflation. Earlier this week, the Labor Department reported that initial unemployment benefits claims dropped by a half-million to 498,000. The number is down from 590,000 the previous week. Although the Fed did not mention the COVID-19 economic fallout, Li cites the rising 10-year Treasury yield as a reason for the drop in the stock market.
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As the stock market fell, oil prices plunged as well. After the Goldman miss, Europe stocks slumped 12% and the Dow has fallen more than 5% for the past three days. On Thursday, Indonesia announced tax relief for its manufacturing industry. On Friday, the 10-year Treasury yield hit a record low of 1.12%, while the two-year rate fell to a seven-year low of 0.9%.