[New York Close] Return of the 2008 Financial Crisis Crash

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] On the U.S. New York stock market, the Dow Jones Industrial Average escaped the crisis of falling 1,000 points for two consecutive days but still remained weak overall. As the Federal Reserve (Fed) made an emergency verbal intervention due to deteriorating investor sentiment, the direction of the stock market next week is drawing attention.

On the 28th (local time), the Dow closed at 25,409.36, down 357.28 points (1.39%) from the previous day, the S&P 500 index fell 24.54 points (0.82%) to 2,954.22, and the Nasdaq index ended trading up 0.89 points (0.01%) at 8,567.37.

The weekly fluctuation rates were -12.36% for the Dow, -11.49% for the S&P 500, and -10.54% for the Nasdaq, marking the worst week since the 2008 financial crisis.

The World Health Organization (WHO) raised the global risk level of COVID-19 to "very high" on the same day, causing investor sentiment to shake again. The Dow fell more than 1,000 points intraday. However, an unexpected emergency statement from Fed Chair Jerome Powell reduced the decline and brought some stability to investor sentiment.

Chairman Powell said in the statement, "The fundamentals of the U.S. economy remain strong. However, the coronavirus is increasing risks to economic activity," adding, "We will act appropriately and use our tools to support the economy."

The market expects the Fed to eventually cut interest rates. Goldman Sachs predicted that the Fed would lower rates three times consecutively from March through June.

White House officials also stepped up to calm market anxiety. Larry Kudlow, Director of the White House National Economic Council (NEC), claimed that it is time for investors to buy at the bottom and urged them not to pay attention to COVID-19-related news. Mick Mulvaney, Acting White House Chief of Staff, also expressed dissatisfaction with the media's coverage of COVID-19.

The 10-year U.S. Treasury yield fell to around 1.1%, hitting a new all-time low. A decline in bond yields means a rise in bond prices. Gold, a representative safe-haven asset along with U.S. Treasuries, showed a sharp decline. On the New York Mercantile Exchange that day, April delivery gold closed at $1,556.70 per ounce, down 4.6% ($75.80) from the previous day.

International oil prices continued their steep decline. April delivery West Texas Intermediate (WTI) crude oil fell 5.0% ($2.33) to $44.76 per barrel, failing to hold the $45 level. The weekly WTI decline was 16.14%. April Brent crude was trading at $50.50 per barrel as of 3:30 p.m., down 3.22% ($1.68) from the previous day, with the collapse of the $50 level imminent.