Dow Jones has recently set another record. The index posted its worst day in a year. On December 4, the Dow Jones Industrial Average fell 799 points, or 3.1 percent, to close at 25,027.07. According to MarketWatch, the Dow Jones Transportation Average showed the steepest collapse in history, losing 476 points, or 4.4 percent. The S&P 500 declined 3.1 percent to close at 2,700.07. The Nasdaq Composite dropped 3.8 percent to close at 7,158.43. This year similar cases were observed only 3 times: on October 10, February 8 and February 5. According to experts, this collapse was caused by the tension in trade relations between the two largest economies in the world. Investors doubt that the US and China will manage to strike a permanent deal. The US wants China to change its approach to financing a number of industries, especially in terms of state subsidies to companies under the Made in China 2025 program; Beijing, in turn, insists that changing any state programs is its sovereign right. And no truce has yet solved this problem.
According to investors, the US Treasury yield curve inversion was the second negative factor. This dynamic in the debt market is traditionally considered one of the harbingers of a recession in the economy in the future. Prior to this, interest rates on short-term securities exceeded the rates on long-term ones in 2007, just before the start of the 2008 financial crisis.
