The Dow Jones US stock index showed the most serious drop in single-day and weekly terms since the 2008 global financial crisis.
The US stock market suffered significant losses in the first week of February 2018.
The S&P 500 index decreased by 2.1% to the level of 2,762.13 points, according to the results of the week, the decrease in the S&P 500 amounted to 3.9%.
For the S&P 500, this is the most serious drop since January 8, 2016.
The Nasdaq index fell 2% to 7,240.95 points.
Last week, Nasdaq lost 3.5%, also showing the worst weekly dynamics since the beginning of 2016.
The most serious drop was demonstrated by the Dow Jones Industrial Average. As a result of trading on Friday, February 2, Dow Jones fell by 666 points (-665.75), 2.5% in percentage terms.
Over the past week, the Dow Jones index fell 1,095 points.
According to MarketWatch, citing FactSet data, this is the most serious collapse of the DJIA in the last 9 years – a more serious decline occurred at the height of the financial crisis, when the Dow Jones index lost 1,874 points in the week ending October 10, 2008.
The collapse of the Dow Jones on Friday, February 2, 2018, has already made history as one of the most serious in the history of the US stock market.
American business media, in particular the CNBC portal, noted that the one-day Dow Jones drop of more than 600 points per day is "very, very rare": the February 2, 2018 index drop was only the 9th such Dow Jones collapse in the whole the history of the American stock market.
Experts name a number of reasons for what happened, including: tightening the monetary policy of the US Federal Reserve, as well as the "overheating" of the US stock market, which has recently shown almost unstoppable growth.
According to many estimates, one of the short-term factors that triggered the market crash on Friday, February 2, was the publication of statistics on the US labor market.
The data came out better than expected, in particular in terms of hourly wage growth.
Many players and investors regarded these indicators as a signal for a more rapid increase in interest rates by the US Federal Reserve.
John Pravin, senior investment strategist at Prudential International Investments Advisers, noted that the decline in the US stock market and the increase in interest rates on the bond market are against the backdrop of “fears” that the Fed may raise rates 4 times this year (rather than 3, as expected earlier).
A number of experts and participants in financial markets have previously stated that a certain correction of the US stock market in 2018 is inevitable in principle and is normal.
This, in particular, was stated by the Director General of the Swiss bank Julius Baer Bernhard Hodler. In an interview with CNBC January 31, he predicted that the correction in the stock markets during the year will be from 5 to 15%.
There are more pessimistic assessments of what is happening. In particular, in an interview with Bloomberg on January 31, former US Fed chairman Alan Greenspan, who headed the Central Bank for almost 19 years (1987–2006), said that he "saw a bubble in the stock and bond markets."
He noted that the American economy "is moving towards a significant increase in interest rates, which will affect the entire structure of the economy." At the same time, Greenspan noted that "thanks to" the tax reform of President Donald Trump, the United States expects a noticeable increase in the budget deficit and public debt.
At the same time, Greenspan said that he was “surprised” by the absence of any explanation in Trump’s message to the US Congress about how the US authorities are going to finance the declared increase in government spending.