The Dow has never lost more than 800 points in a day.
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The S&P 500 index was down 77.68 points at 1,893.21 and the Nasdaq dropped 179.79 points to 4,526.25.
In Canada, the TSX fell 768.50 points to 12,705.17. “There’s no rational choice anymore, no rational reaction”.
The selling in America was presaged by action in Europe and Asia.
“Bear markets (falls of 20 per cent or more) normally precede a recession and while a China slowdown will undoubtedly prove a strong headwind for some sectors of the economy and may clip growth in the West (watch Germany), on the current evidence we do not expect this to send us back into recession”.
The MSCI Emerging Markets Index slid 6 per cent, for a seventh straight loss. Basic-resource producers led losses as Brent crude tumbled through $45 a barrel. “A lot of that is tied to oil and the global rout in capital markets just compounds the problem for Canada”.
Dabiet says it’s hard to predict which way the markets will go on Tuesday – and whether Monday’s dramatic plunge, as well as last week’s losses, could be the start of a protracted bear market.
“There’s loads of worry within the markets”, stated Bernard Aw, market strategist at IG.
Laszlo Birinyi, the investor whose bullish calls have repeatedly come true since 200, says that while the selloff lashing global equities is painful, its cause is no mystery – and that’s a reason for optimism.
“I think emotions got the best of investors“, said Philip Blancato chief executive at Ladenberg Thalmann Asset Management in New York.
– That represents a drop of almost 15 per cent from its highs of 15,000-plus points in April, putting it well into correction territory. Shares succumbed to a global selloff that’s wiped more than $5 trillion off the value of equities around the world since China’s shock currency devaluation on August. 11.
The Bloomberg Commodity Index fell 2.7 per cent, heading for the lowest closing level since August 1999. December gold was down $5.80 at US$1,153.80 an ounce and September copper fell five cents to US$2.26 a pound. Sales climbed 5.4 percent, the biggest gain this year, to a 507,000 annualized pace from a 481,000 rate in the prior month, a Commerce Department report showed. The Russian ruble dropped 2.3 percent to a seven-year low.
Moreover, speculation had been building all year for the Federal Reserve to raise interest rates in September for the first time since 2006, following the end of quantitative easing in 2014.
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On Tuesday, the October crude contract was up $1 at US$39.24 a barrel and October natural gas contracts were up two cents at US$2.68.
