Interest rates continued down on Monday while the stock market took its worst pounding of the year. The resulting flight-to-quality rally in Treasury bonds drove the 30 year yield to yet another record low.

The 30 year and 15 year fixed rate mortgage averages fell to 6.75% and 6.45% respectively. The 1 year ARM rate was unchanged at 5.61%

Stocks prices suffered one of the worst single-day declines in history. The Dow Jones Industrial Average was off 512 points in the second largest point decline in its history. The NASDAQ suffered an all-time record loss of over 140 points. Technology stocks were particularly hard hit, with even bellwether issues such as Microsoft, Intel, Compaq and IBM suffering near double-digit percentage losses. The Internet sector was pummeled, with formerly high flying stocks such as Yahoo!, Amazon.com, Lycos, Excite, and Infoseek all absorbing losses between 17% and 29%.

Treasury bond investors fared considerable better. The price of the benchmark 30 year issue jumped over one point, driving the yield down to 5.25%, a drop of 8 basis points (0.08%) from Friday's previous record low 5.33%.

Published: September 1, 1998

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