The last time the market had a plunge that big, known as a “correction” on Wall Street, was last August.
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The rocky start to the New Year on Wall street got a bit worse as the Dow dropped 364 points at Wednesday’s close.
S&P 500 e-minis were up 11.75 points, or 0.61 percent, with 260,485 contracts traded. The ruble gained for the first time in five days, appreciating 0.9 percent. The Russell 2000, which is made up of small-company stocks, is down 20 percent from its June peak.
“The market’s very oversold”, said Bruce Zaro, chief technical strategist at Bolton Global Asset Management in Boston.
Brazil is an “extremely serious” case after falling into recession past year, the S&P official warned, pointing to the multi-faceted impact on it from United States monetary policy, China, commodity prices as well as its economic policy and governance. Brent crude, the worldwide standard, fell 2 percent.
“I think 2016 will be a more challenging year for global markets”, said Mr. Markham, noting that valuations in the U.S. are quite high, and “the unconditional support from central banks which we’ve had, certainly in the USA, has come to an end”. The cost to protect against defaults by North American investment-grade companies soared to a three-year high, a measure of junk bonds had the worst day in a month and last year’s equities winners stumbled, with consumer staples and technology shares bearing the brunt of losses. The Nasdaq slid 159.85, or 3.4 percent, to 4,526.06.
Chinese shares seemed to stabilize following Monday’s 5.3 percent selloff, rising 0.2 percent with the People’s Bank of China said to have repeatedly intervened in the offshore market for the yuan.
Biotechnology stocks took a drubbing.
The CBOE Volatility Index (VIX – 25.22) boomed to a 2.8-point, or 12.2%, gain, after finding a foothold at its 10-day moving average.
China’s stock market sank about 7 percent Thursday after the yuan fell to its lowest level compared to the dollar since March 2011.
Apple was up 1.9 percent at $100.30.
EARNINGS UNDERWHELM: Railroad operator CSX and supermarket chain SuperValu were down after the companies reported their latest quarterly results.
Gold retreated for a third day, losing 0.5 percent in the spot market to $1,088.48 an ounce amid concern the slowdown in China will crimp demand for precious metals. BorgWarner led with a 9.5 per cent decline after providing 2016 sales guidance that fell short of previous estimates. Oil has now fallen almost 18 percent this year. Crude oil stocks increased by 200,000 barrels in the week ended January 8, according to the Energy Information Administration.
In Europe, Germany’s DAX fell 0.2 percent while France’s CAC 40 rose 0.3 percent.
US natural gas fell for a second day, slipping 5.8 percent to $2.257 per million British thermal units in NY, its biggest drop since December 30. Japan’s Topix index rallied from its lowest level since September, advancing 2.9%, and Hong Kong’s Hang Seng Index rose 1.1%.
The S&P 500 traded at its low for the session as of 1:39 p.m.in NY, with losses extending after Europe’s markets closed modestly higher. Benchmark U.S. crude edged up 10 cents to $30.58 a barrel in electronic trading on the New York Mercantile Exchange.
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The euro was slightly higher on the United States dollar, at US$1.0874, while the greenback slipped slightly to 117.72 yen. The Dow on Wednesday travelled more than 470 points from the session high to low.
