Market Extra: Dow, S&P 500 Mark Worst Start To A Quarter Since 2008 Financial Crisis As Recession Fears Accelerate

U.S. equity markets on Wednesday were ensnared in a two-day tailspin that has pushed the benchmark indexes to one of the worst starts to a quarter since the 2008-09 financial crisis.

The Dow Jones Industrial Average DJIA, -1.86%, was down more than 500 points, or 1.9%, at 26,078, with a two-session skid of more than 3%, representing the worst start to a quarter since the last three months of 2008, when the Dow slumped 19.4% in the fourth quarter, according to Dow Jones Market Data.

Already considered an unusually volatile period for the stock market, which has logged historically ugly October declines in 1929, 1987 and 2008, worries about geopolitics and growing signs of domestic and international economic weakness have fueled bearish bets and sent stock-market optimists, at least momentarily, scurrying for cover in assets perceived as safe.

Read: Stocks just delivered a reminder about October’s reputation for volatility

See: Here’s how the stock market tends to trade in the rest of the year after an ugly

The 10-year Treasury yield TMUBMUSD10Y, -0.54% was down 5 basis points to 1.59% Wednesday evening, while gold futures GCZ19, -0.04% jumped 1.3%, retaking a bullish perch for the haven asset at $1,500 an ounce.

Meanwhile, the broader market notched its worst start to a quarter in about a decade, with trading in the first two sessions in October putting the S&P 500 index SPX, -1.79% driving the broad-market benchmark to a loss of about 3% to start the quarter, which would represent its worst such start since a 5.49% skid in fourth quarter of 2009.

The Nasdaq Composite Index COMP, -1.56%, down 2.7% so far in October, and the Russell 2000 index RUT, -0.92%, off 3.1%, also marked their worst starts to the quarter since 2009.

Reflecting the slump in the equity indexes, one reading of implied stock-market volatility, the Cboe Volatility Index VIX, +10.78%, a gauge of bullish and bearish S&P 500 options bets that tends to rise as stocks fall, was on pace for its biggest rise to a quarter on record. The so-called fear index was up about 29% in the first two days of October, which would eclipse the 24.58% gain for the index back in the fourth quarter of 1992.

Helping to stoke bearish sentiment on Wednesday was a private-sector employment report from Automatic Data Processing ADP, -2.37%, which showed that a modest 135,000 jobs were created in September, in another sign that hiring is slowing along with the broader U.S. economy. The data comes a day after the Institute for Supply Management’s manufacturing survey produced its worst reading since 2009.

Evidence of a slowdown in the U.S. economy also comes amid a persistent Sino-American dispute over tariffs and intellectual property rights between the world’s largest economies.

Worries about Britain’s exit from the European Union, and developments related to President Donald Trump’s impeachment inquiry over allegations that he has been using the power of the Oval Office to undermine democratic elections, were also concerning investors.

“Stocks are firmly in the red as fears about a recession have gripped the markets. The dreadful ISM manufacturing reading from yesterday is stilling playing on traders’ minds,” wrote David Madden, market analyst at CMC Markets, in a Wednesday research note. “The ADP report added to the worries the US economy is slowing down.”

RECENT NEWS

ETF Market Update: Assessing The Impact Of Receding US Rate Cut Expectations

The ETF market has been subject to significant shifts in recent months, with one of the key drivers being the evolving e... Read more

Market Response: Understanding The Drop In Arm Shares

In the fast-paced world of technology, market reactions can serve as barometers of industry health and company performan... Read more

Market Watch: Investor Sentiment Points To Steady Rates As BoE Convenes

As the Bank of England's Monetary Policy Committee (MPC) prepares to convene, investor sentiment plays a pivotal role in... Read more

The Department Of Justice Vs. Google: A Clash Over Market Power

The culmination of the high-profile antitrust trial between Google and the Department of Justice marks a significant mil... Read more

Mitigating Risks In The Bond Market: Strategies For Uncertain Times

In today's volatile bond market, characterized by liquidity concerns and rising interest rates, effective risk managemen... Read more

UK High Street Banks Rake In £9.2 Billion In Interest On BoE Reserves: A Closer Look

In the intricate world of finance, where numbers often tell compelling stories, one recent figure stands out: £9.2 bill... Read more