The Nasdaq Composite dropped 179.79 points, or 3.82 percent, to 4,526.25, also in correction. The three indexes are down for the year. Futures for the S&P 500 and Nasdaq also showed signs of advancing. The fact that the U.S. market went almost four years without one is historically unusual – it is the third-longest such streak in the last 50 years, according to JPMorgan Asset Management.
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Shortly after noon ET, the Dow was down 219.88 points, or 1.34%, to 16,239.87. But the fire sale was short-lived. By the close, the Dow was down just 588 points.
World stocks are plunging as a global sell-off continues, costing investors up to $10 billion worldwide, much of that tied to 401(k) retirement accounts for millions of people.
The Dow Jones index saw its biggest plunge ever as the market opened Monday at a fall of 1089 points.
That meant the latest declines have wiped out this year’s gains.
“Investors are overreacting about economic risks in China”, Capital Economics said in a research note Tuesday. “The lack of clarity makes it hard to assess what is needed to stem the rout”, said Bernard Aw of IG Markets in a report.
Investors are now waiting to see if the “national team” – meaning entities buying stocks for the government – will intervene to prop up the market and if China’s central bank will further loosen monetary policy.
In Japan, the Nikkei 225 index, which had risen earlier today, closed down 3.9 percent at 17,806.70. Hong Kong’s Hang Seng index rose 153.39 points, or 0.7 per cent, to 21,404.96, while Sydney’s S&P ASX 200 gained 2.7 per cent to 5,137.30 and Seoul’s Kospi index and Singapore’s Straits Times index also rose.
Those declines followed tumbles over the weekend in emerging markets such as Egypt, Dubai and Saudi Arabia.
“The conjecture that the Chinese economy can propel the U.S. economy into recession is ridiculous, when it’s twice the size of the Chinese economy and is consumer-based”.
“My biggest concern is that global growth momentum is very fragile”.
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Economists were expecting Beijing to act to try and prop up stocks. “Since exports to China account for only 9% of the total and 1.2% of US GDP, even in the unlikely event that China did suffer a hard landing, the impact on the US economy would be muted”.
