Even with Tuesday’s gains, the Dow and the S&P were on track for the their worst monthly losses since February 2009 and the Nasdaq headed for its steepest drop since November 2008.
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The benchmark index fell almost 1,100 points shortly after the opening bell Monday, only to quickly right itself to a loss of 603 points at 15,858.
The move by China‘s central bank came after the Shanghai index closed down 7.6 percent on Tuesday following a 9 percent loss on Monday.
Wall Street markets were among the many around the world that staged a massive sell-off Monday in response to China’s Shanghai Composite Index plunging 8.5 percent, following failed attempts by the Chinese government to stimulate its market.
Despite another bloody day on the Chinese markets, stocks around the world stabilized on Tuesday.
The move by China’s central bank, which also relaxed reserve requirements for the second time in two months, came after Chinese stocks slumped 8 percent on Tuesday.
Lefort told 22News while changes on Wall Street may be temporary, you will notice longer term effects of China’s currency devaluation. Australian shares fell 0.1 percent to 5,131.30 and shares in New Zealand, Taiwan and Southeast Asia were mostly lower. Stocks were up 3 percent in London, 4 percent in Frankfurt and 4 percent in Paris. In Japan, the Nikkei rebounded from its own drop of 4 percent at the open to rally to positive territory, while Hong Kong’s Hang Seng index was up more than 2 percent. “We’re talking maybe a 10th of a percentage point of U.S. GDP in a year“, Faucher said of the potential impact of China’s troubles on the U.S. economy.
He also cautioned that some of the factors that could send the U.S. market far lower are unlikely – a big rise in unemployment, a spike in interest rates or inflation, or a banking crisis.
Between last week and Monday, the Dow Jones Industrial Average suffered its worst decline in four years.
Markets fared better elsewhere in Asia.
PHOTO:Specialist Michael O’Mara works on the floor, August 25, 2015, of the New York Stock Exchange.
The Fed is still likely to begin to “gradually” hike interest rates sometime this year, Federal Reserve Bank of Atlanta President Dennis Lockhart said Monday in Berkeley, California, predicting that steady economic growth will continue.
After a stomach-churning ride for investors yesterday, markets are bouncing back and once again it is China pushing the price of stocks, though this time higher.
Crude oil futures settled up $1.07, or 2.80 percent, at $39.31 a barrel.
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China, one of the main engines of the world economy, has overtaken Greece at the top of the worry list of global investors, who fret its economy is growing at a much slower pace than the official 7 per cent target for 2015.
