The stock market downturn began Friday after the July jobs report showed slower job growth and higher unemployment than economists expected, stoking fear about the Federal Reserve’s high interest rates suffocating the U.S. economy.
As the losses accelerated Monday, investors pointed to the unwinding of “carry trades,” a term for stock purchases using cheap foreign currency that has been borrowed and needs to be repaid, as the reason for the stock rout.
The Dow Jones Industrial Average of big U.S. companies closed down 1,033 points or 2.6 percent Monday. The S&P 500 index finished 3 percent down, and the technology-heavy Nasdaq composite lost 3.4 percent in the sell-off.
Treasury yields have also dipped as investors have taken shelter in steadier government securities, with the return on the 2-year note falling below 4 percent for the first time in more than a year.
“As investors exited their positions in the yen, equity markets plunged, and yields fell across the Treasury curve as investors sought the safe haven of U.S. government securities,” Joe Brusuelas, chief economist at RSM, wrote in an analysis.
The Hill’s Tobias Burns has more here.
