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A horse carriage in old New York. - Pic courtesy of ephemeralnewyork
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NEW YORK, Jan 8, 2016:
The last time the Dow Jones Industrial Average had such a miserable start to a year, traders were likely heading to the New York Stock Exchange at 10 Broad Street in a horse-drawn buggy.
The 5.2% drop in the Dow in the first four days of 2016 was its worst such beginning since at least 1896, according to financial data provider FactSet Research.
That was about four years before the zeppelin made its first aerial voyage, seven years before the Wright brothers made their first flight at Kitty Hawk, North Carolina, and 12 years before the debut of Ford Motor Co’s Model T car.
Groundbreaking on the New York City subway system did not begin until 1900, and the opening of the first subway line did not take place for another four years.
The demolition of the New York Stock Exchange at 10 Broad Street began in May 1901, and the new exchange opened at 18 Broad Street in 1903.
It did not open at its current address – 11 Wall Street – until 1922.
The 30-component Dow index as it is currently structured did not make its debut until 1928. Instead, it had only 12 components that reflected the industrial landscape of the time, including National Lead, Pacific Mail Steamship and Tennessee Coal & Iron.
There is, however, one common element in the index between then and now: General Electric.
Shares on major exchanges had fallen for a sixth straight day yesterday and crude oil prices touched multi-year lows as investors fretted over the state of China’s economy and its ability to stabilise its stock market.
In a move that deepened concerns over China’s economic health, the People’s Bank of China yesterday set the yuan midpoint rate lower for an eighth consecutive day. The 0.5% decline was the biggest between daily fixings since August.
China suspended a circuit breaker implemented at the start of 2016 that stopped trading for the day when the benchmark index fell 7%, a halt already triggered twice this week. Analysts and investors said the mechanism, put in place to avoid market volatility, may have backfired.
“People see the weakness in China and in the overall equity market and think there’s going to be an impact on corporations here in the US,” said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
Rounding out its worst four-day start to a year in more than a century, the Dow Jones industrial average fell 392.41 points, or 2.32%, to 16,514.1.
The S&P 500 lost 47.17 points, or 2.37%, to 1,943.09 and the Nasdaq Composite dropped 146.34 points, or 3.03%, to 4,689.43.
A gauge of major stock markets globally fell 2.2% and Nikkei futures were down 2.6%.
Investors fear China’s economy is even weaker than had been imagined, with Beijing, in a bid to help exporters, allowing the yuan’s depreciation to accelerate. The move risks triggering a cycle of competitive devaluation, said Mexican Finance Minister Luis Videgaray.
The US dollar tumbled 0.9% against a basket of currencies, losing 1.4% versus the euro and 0.7% to the yen.
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