Stocks got caught in a vicious machine-driven sell-off Monday, with the Dow tumbling nearly 1,600 points by midafternoon before closing the day down 1,175 — the single largest drop in points in the market’s history.
After a short recovery — when bargain hunters tried in vain to save the day and were able to boost the Dow an incredible 655 points in six minutes — the bears, fearful of inflation and rising interest rates, took over and the sell-off was on again.
The Dow closed the day down 4.6 percent, finishing at 24,345. The broader S&P 500 also plunged 4 percent, shedding 113 points, to 2,648, while the Nasdaq closed down 3.8 percent, losing 273 points, to 6,967.
The Wall Street wipeout — which followed a 666-point Dow decline on Friday — erased all the 2018 gains for both the Dow and the S&P.
And some analysts were not surprised.
“Historically, market has 10 percent moves top to bottom in nearly every year,” Bruce Bittles, chief investment strategist at Baird, told The Post.
“Looks like we are getting back to what is typical as opposed to last year’s historically low volatility.”
The drop was nausea-inducing to be sure, but a far cry from the Dow’s record 22.6 percent Black Monday drop on Oct. 19, 1987.
Another contributing factor to Monday’s 1,175-point fall was an interview aired on CBS’ “Sunday Morning” in which ex-Federal Reserve Chair Janet Yellen cautioned about the “high” market.
“This was crowd psychology at its best,” Daniel Wiener, chief executive of Adviser Investments, told The Washington Post.
“Investors had the weekend to worry about what happened Friday, and they sold on Monday. This is normal, everyday stock market volatility. And it’s healthy.”
The numbers cratered as President Trump — who has repeatedly taken credit for the record-setting gains on Wall Street since his election — was at a manufacturing plant in Cincinnati touting his tax reform.
The White House said Trump was more focused on long-term growth than day-to-day numbers.
“The president’s focus is on our long-term economic fundamentals, which remain exceptionally strong, with strengthening US economic growth, historically low unemployment and increasing wages for American workers,” Press Secretary Sarah Huckabee Sanders said.
For now, the economy remains on firm footing, even with the prospect of somewhat higher inflation. Inflation concerns escalated after Friday’s monthly US jobs report showed that average wages surged 2.9 percent in January from 12 months earlier — the sharpest year-over-year gain since 2009.
“What we’re seeing right now is an economy overall that is doing quite well and has strong fundamentals,” said Gregory Daco, chief US economist at Oxford Economics. “The economy remains on track to expand at a fairly solid pace, and along with that comes inflation.”
And despite the dramatic Wall Street numbers, most analysts believe the underlying economy is still strong.
The job market is in its best shape in at least a decade and businesses continue to hire at a pace that could drive the unemployment rate — already at a 17-year low of 4.1 percent — even lower.
Some economists think the jobless rate by year’s end could reach 3.5 percent, which would be the lowest level in a half-century.
And with more solid job security and rising pay in some industries, Americans as a whole are growing more optimistic about the economy’s direction.
And their confidence has sparked consumer spending, the primary fuel of the US economy. In the final three months of 2017, consumer spending rose at its fastest pace in a year and a half.
Additional reporting by Bob Fredericks with AP