U.S. stocks fell in the worst selloff since Britain voted to leave the European Union, with the Dow Jones Industrial Average falling almost 400 points after a Federal Reserve official signaled more willingness to raise interest rates.
The S&P 500 Index fell 2.5 percent to 2,127.81 at 4 p.m. in New York, marking a two-month low and its biggest weekly drop since February. The gauge sank below its average price during the past 50 days for the first time since July 6. The Dow lost 394.46 points, or 2.1 percent, to 18,085.45, while the Nasdaq Composite Index declined 2.5 percent. The CBOE Volatility Index surged the most since the Brexit vote, up 40 percent, to a two-month high.
Asian stocks headed for the biggest drop since June, following a rout in U.S. shares, as policy officials at central banks signaled a reluctance to extend stimulus.
The MSCI Asia Pacific Index dropped 1.9 percent to 137.69 as of 11:01 a.m. in Tokyo. The losses follow a 2.4 percent tumble on the S&P 500 Index on Friday as volatility surged after Federal Reserve Bank of Boston President Eric Rosengren said the economy could overheat if they waited too long to raise interest rates, spurring bets on a hike by the end of the year. Equity markets in Singapore, Indonesia, the Philippines and Malaysia are among those closed for holidays Monday.
The abrupt selloff and surging volatility is testing investors’ nerves following an extended period of relative calm before Friday. The CBOE Volatility Index, a measure of price turbulence known as the VIX, soared 40 percent on Friday, the most since the Brexit vote. That took the measure above its average level during 2016. Before Friday, the S&P 500 had traded within a range of less than two percentage points for 40 days.
Reference: Bloomberg
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