Stocks Plunge, Gold Surges as U.S.-China Trade Tensions Roil Markets
Stocks sold off again on Monday as U.S.-China trade tensions continued to weigh.
U.S. stocks sold off sharply on Monday, as investors cycled out of riskier assets into gold, Treasuries and the Japanese yen.
All of Wall Street’s major indices finished lower, mirroring last week’s Monday’s sharp selloff. The Dow Jones Industrial Average (NYSEARCA:DIA) fell 391.00 points, or 1.5%, to 25,896.44.
The large-cap S&P 500 Index (NYSEARCA:SPY) fell 1.2% to 2,882.63, with all 11 primary sectors reporting declines. Among them, eight sectors registered losses of 1% or more.
The technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) closed down 1.2% at 7,863.41.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) blew past 20 on Monday, a level that is normally associated with the historic average. VIX, which trades on a scale of 1-100, jumped 13.7% to 20.43. The so-called “fear index” peaked at 21.26.
Investors on Monday dumped equities in favor of safe haven assets like Treasuries, gold and the Japanese yen. The yield on the 10-year U.S. Treasury fell by as much as 10 basis points. Yields fall when bond prices rise.
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Gold was also back to trading at six-year highs, with the December futures contract surging $16.80, or 1.1%, to $1,525.30 a troy ounce on the Comex division of the New York Mercantile Exchange. Silver rallied 18 cents, or 1.1%, to $17.11 a troy ounce.
In currencies, the U.S. dollar fell against a basket of major competitors. The DXY basket fell 0.1% to 97.36.
The Final Word: Gold prices could be heading a lot higher over the next six months. Goldman Sachs upgraded its forecast on bullion to $1,600 a troy ounce by early next year in light of escalating trade tensions between the United States and China.