CHINA AGAIN: China’s main Shanghai stock index plunged 6 percent, its largest fall since an 8 percent dive on July 27.
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“The volatility of those markets in China has been tremendous”, said Nick Raich, CEO at The Earnings Scout. The Chinese central bank injected 120 billion yuan ($18.8 billion) into the market in its biggest one-day injection in just over a year-and-a-half. Stocks in Taiwan and Southeast Asia also fell.
The New York Fed’s Empire State general business conditions index tumbled from 3.86 in July to -14.92 in August, its lowest since April 2009, due to steep drops in new orders and shipments. June’s starts were also revised higher to a 1.20 million-unit rate from the previously reported 1.17 million-unit pace. Construction of single-family houses accounted for all of the gains. The data also propped the S&P Homebuilders ETF to trade an an eight-year high.
“The problem in China is that the markets haven’t been released for free and open trading and until that happens there is going to continue to be downside pressure”, said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.
North American markets were lower in the face of renewed concern over the strength of China’s economy and a disappointing earnings and guidance report from retail bellwether Wal-Mart.
A 6% tumble in Chinese shares on Tuesday hit Asian stocks and dented US equities while copper and oil prices touched multi-year lows.
“Things are a bit hot and cold”, said Gregori Volokhine, president of Meeschaert Capital Markets. “It’s an indication that there’s no capitulation [in this market]”.
In energy markets, benchmark U.S. crude fell 32 cents at $41.55 per barrel in electronic trading on the New York Mercantile Exchange.
“Supply is at an all-time high”, Frederick said.
Highlights this week include Wal-Mart earnings Tuesday and Wednesday’s release of Fed minutes, which could shed light on the US central bank’s timing for an interest rate increase, expected later this year. Dick’s also raised its full-year guidance.
For the third quarter, TJX diluted earnings per share in the range of 80 cents to 82 cents compared to 85 cents in a year ago period.
Wireless carrier Sprint (NYSE:S) is doing away with two-year contracts in favor of a business model in which customers lease their phones.
The Dow Jones industrial average fell 43 points, or 0.2 percent, to 17,501 as of 9:35 a.m. Eastern time Tuesday.
S&P 500 e-minis ESc1 were down 5 points, or 0.24 percent, with 122,128 contracts traded.
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BONDS & CURRENCIES: U.S. government bonds fell, nudging the yield on the 10-year Treasury note up to 2.19 percent, roughly its level at the end of last week. Freeport-McMoRan (FCX), Dow Chemical (DOW), and Alcoa (AA) were among the worst performers, while the Materials Select Sector SPDR ETF (XLB) fell 0.7%.
