Investors have been jittery as markets got off to their worst four-day start to a year and economists slashed fourth-quarter US growth estimates.
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“Oil markets will be concerned that this could be an incremental step in a deteriorating political situation that might ultimately threaten world oil supply”, said Ric Spooner, chief analyst at CMC Markets. Now, UBS Group AG’s technical strategists predict the US benchmark will enter a bear market as early as this year. Visit MarketWatch.com for more information on this news.
Elsewhere in Asia, Japan’s Nikkei 225 tumbled 3.1 percent, and Hong Kong’s Hang Seng retreated 2.7 percent. For the second time in four days, trading was suspended under new circuit breaker rules unveiled this week.
The Dow Jones industrial average.DJI closed down 392.41 points, or 2.32 percent, to 16,514.1, the S&P 500.SPX had lost 47.17 points, or 2.37 percent, to 1,943.09 and the Nasdaq Composite.IXIC had dropped 146.34 points, or 3.03 percent, to 4,689.43.
Technology stocks were also hit.
James said Friday’s USA jobs report for December could have a stabilizing effect if it is positive, but a bad report probably would spark more selling.
Official economic growth in China is still running at just below 7%.
Declining issues outnumbered advancing ones on the NYSE by 2,676 to 410, for a 6.53-to-1 ratio on the downside; on the Nasdaq, 2,431 issues fell and 418 advanced for a 5.82-to-1 ratio favouring decliners. Data on Friday showed nonfarm payrolls surged in December and unemployment rate held steady at 5 per cent. October and November payrolls were revised sharply higher.
Crude oil ended a volatile session down slightly following concern about Middle East tensions, but Brent turned higher late. While a slowdown in China has some impact on the USA because American companies like Apple sell products there, the vast majority of the US economy is made up of Americans buying things at home.
Part of that difference influencing the Chinese gyrations comes from the government’s move to withdraw limits placed on stocks in June.
The plunge began on the Shanghai index, which dived 6.9% to 3,296.66 before the market was closed early to avert steeper falls.
The People’s Bank of China on Wednesday stepped in to weaken the yuan further, raising fears that the country’s economy was even weaker than had been expected. It was at 70.84 cents US, down 0.10 of a cent from Thursday’s close at 70.94 cents U.S.
China’s stock market is in complete disarray. “You are not getting that much of a lasting reaction in markets”.
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Investors also should look beyond what is less than one week of trading for the year. “I don’t think that’s the case on this one”, said Yardeni.
