Following yesterday’s Fed minutes, the upbeat data added to recent speculation that the central bank will begin raising interest rates next month.
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Wall Street was also weighed down by a drop in finance stocks and was poised for a third day of declines as expectations cooled for a U.S. interest rate hike in September. The declines pushed the Standard & Poor’s 500 index into the red for 2015 in early-afternoon trading.
The Dow Jones industrial average fell 358.04 points, or 2.06 percent, to 16,990.69, the S&P 500 lost 43.88 points, or 2.11 percent, to 2,035.73 and the Nasdaq Composite dropped 141.56 points, or 2.82 percent, to 4,877.49. While the U.K.’s FTSE 100 Index dropped by 0.6 percent, the French CAC 40 Index and the German DAX Index plummeted by 2.1 percent and 2.3 percent, respectively.
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.
WALL STREET: Selling on Thursday outweighed buying by a ratio of more than eight to one in heavy trading.
As the selling picked up Thursday, investors moved money to traditional havens in times of uncertainty. The drug Addyi was approved Wednesday by U.S. regulators.
At its session low on Thursday, the S&P 500 was down 4.3 percent from its record intraday high set in late May. Chinese shares have had a wild ride this week, and that has raised uncertainty about Beijing’s ability to stabilize the market and its surprising devaluation of its currency. China’s devaluation has caused other countries to in turn devalue their own currencies, notably the oil rich country of Kazakhstan and the Southeast Asian manufacturing center of Vietnam. Strategists and traders, noting the lack of major U.S. economic news, said the drop in stocks was also likely tied to computerized selling after the S&P 500 moved below one of its most closely watched indicators, a 200-day moving average. Analysts are concerned that television watchers are choosing to move away from cable, which could hurt lucrative Disney properties such as ESPN.
The dollar.DXY shed 0.61 percent to 96.028 against a basket of major currencies amid the diminished rate hike expectations, touching a 5-week low of 95.724.
Commodities and emerging markets were among the hardest-hit by fear of slowing Chinese demand, and were exacerbated by the Fed minutes.
Disney shares have fallen 17.8 percent since the company reported earnings earlier this month. Gilead Sciences dipped 3 percent and Google declined 2 percent.
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“That’s manifesting itself in lower oil prices“, he said, pointing to the correlation between stocks and crude futures. Brent crude, which is used to price global oils, fell 50 cents to $46.66 a barrel. Japan’s Nikkei 225 Index fell by 0.9 percent, while Hong Kong’s Hang Seng Index tumbled by 1.8 percent.
