The Dow Jones Industrial Average (DJI) slumped 1.9%, or 332.78 points, to close at 17,662.94. The Standard & Poor’s 500 (S&P 500) plunged 1.7% to 2,044.16. The tech-laden Nasdaq Composite Index closed at 4,859.80; also losing 1.7%. The fear-gauge CBOE Volatility Index (VIX) jumped 10.8% to settle at 16.69. A total of about 3.67 billion shares were traded on Tuesday on NYSE. Decliners outpaced advancing stocks on the NYSE. For 71% stocks that declined, 27% advanced.
On Tuesday, euro witnessed another decline of nearly 1.4% against the U.S. dollar to drop to $1.07. Euro plunged to its lowest level in almost 12 years. Concerns that an interest rate hike was in the offing combined with ECB’s monetary easing program, leading to the plunge. Investors anticipated that the Fed will consider a rate hike in second half of this year as strong jobs data on domestic front suggested that labor market is improving at an impressive rate. The Bureau of Labor Statistics (BLS) reported last Friday that the U.S. economy created a total of 295,000 jobs in February. Moreover, the unemployment rate went down to six and a half year low figure of 5.5% last month.
Meanwhile, the European Central Bank’s (ECB) quantitative easing program that got underway on Monday also weighed on the euro. The program has pushed Eurozone bond yields to their lowest levels ever. Short-term German government bond yields are in negative territory. ECB President Mario Draghi had already said the ECB would purchase these bonds even if they have a negative yield. As announced in January, ECB will buy government bonds worth 60 billion euros a month through a quantitative easing program. Meanwhile, the stronger dollar dragged down yields on 10-year U.S. Treasury notes by seven basis points to 2.12%.