While that reduced speculation the central bank will raise rates at its next gathering, China’s shock devaluation continued to roil emerging-market assets and threatened to slow global growth amid a rout in commodities.
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Mounting concern that global growth is weakening and uncertainty about the timing of a US rate increase fuelled a second day of losses for European stocks.
ATHENS, Greece (AP) – Greece is receiving the first portion of a final 86 billion euro ($95.6 billion) bailout today. In New York yesterday, the Dow Jones industrial average lost 162.61 points, or 0.9 percent, to 17,348.73.
Natural gas, airline, consumer discretionary and banking stocks also fell sharply, while gold stocks were among the few groups to buck the downtrend amid a sharp increase by the price of the precious metal.
Germany’s DAX fell 0.7 percent to 10,612.52, while Britain’s FTSE slipped 0.4 percent to 6,376.55 and the French CAC40 lost 0.3 percent to 4,871.49.
The U.S. stock market endured its worst performance in 18 months on Thursday, driven lower by another slump in Chinese shares and heavy selling by technical traders.
Retailer Sears Holdings (NASDAQ:SHLD), which saw its shares sold off heavily yesterday, was in the doghouse again this morning after its second quarter results failed to impress. “It’s an art to be that vague”, Tim Dreiling of The Private Client Reserve of U.S. Bank told TheStreet.
The department added that core CPI also rose 0.1 percent. The S&P 500 lost 2.1% Thursday, joining the Dow in negative territory for 2015.
Commodity plays came under fresh pressure on worries about weak Chinese demand.
Kazakhstan stopped defending its currency, triggering a 23 per cent collapse in the tenge.
“Right now there are so many more concerns than hopes”, said Larry Peruzzi, director of worldwide trading at Cabrera Capital Markets LLC in Boston. Energy shares slid 2.8 percent as data showed U.S. crude inventories rose 2.62 million barrels last week, according to the Energy Information Administration.
Bond prices rose. The yield on the 10-year US Treasury fell to 2.07 per cent from 2.20 per cent on Tuesday, while the 30-year dropped to 2.75 per cent from 2.86 per cent. Bond prices and yields move inversely.
“We have been conditioned to buying on the dip”, said Quincy Krosby, a market strategist for Newark, N.J.-based Prudential Financial Inc., which oversees more than $1 trillion.
The 14-day correlation between the S&P 500 and Brent prices is at a five-month high. “People want something stable that they can hold”.
The year’s biggest winners also were hit hard, possibly a sign that investors feel the seven-year bull market for stocks might be slowing down.
The biggest herd of US dollar bulls since February is looking vulnerable as traders slash odds the Federal Reserve will raise interest rates next month.
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“No matter what you’re going to get a knee-jerk reaction”, Steve Bombardiere, an equity trader at Conifer Securities LLC in New York, said by phone. “People want the Fed raising rates [in response to] the economy getting better”.
