For the second day in a row Wall Street was singing the blues as financial stocks and falling oil prices led decliners. The S&P 500 dropped 1% eliminating most of its gains this year, while the Dow Jones Industrial Avg. suffered its first triple digit loss in almost a month (March 8th).
There also came word from Standard and Poor’s fixed income research team that more debt-laden companies have defaulted over the past 12 months. The default rate for high-yield bonds has now risen to the highest level in 6 years, and junk bonds could soon spell big trouble for investors.
Diane Vazza, S&P’s head of global fixed income research made a eye-opening prediction today.
“Defaults are only likely to increase over the rest of the year. The 12-month rate will rise to 3.9 percent by December and in a pessimistic but plausible chain of events, the default rate could rise to 5.2%.”
Watch the whole story from CNBC below.
In addition to the news about bond defaults, a bigger than expected trade deficit prompted economists to reduce their forecast for 1st quarter growth.
See CNBC’s Senior Economics reporter Steve Leiseman explain below.
Here are the final numbers from Tuesday, 4/5/16 on Wall Street:
Dow Jones Industrial Average: 17,603.32 (-133.68/ -.75 %)
NASDAQ: 4.843.93 (-47.86/ -0.98 %)
S&P 500: 2,045.17 (-20.96/ -1.01 %)