“Investors are wondering if growth isn’t coming from the U.S. or China, where is it going to come from?” said Tim Courtney, chief investment officer of Exencial Wealth Advisors.
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The Standard & Poor’s 500 index, a broader benchmark, fell below the psychologically important 2,000 mark.
Avianca Holdings (AH) has helped to lead the airline sector lower, with the air transportation services provider now down by 10.5%.
Following last week’s decision by the country’s monetary authorities to reduce the value of the yuan, China’s currency, stock markets have really taken a hit. “Back four or five years ago, we would have called this normal volatility”. Oil plunged below $40 for the first time since the financial crisis, and government bonds rallied as investors raced into hiding spots.
Software, retail, trucking, and steel stocks are also seeing considerable weakness on the day, while some electronic storage stocks are bucking the downtrend.
Trading on Wall Street ended with a whimper Friday with the two most popularly watched market indices, the Dow Jones industrial average and the S&P 500, surrendering all of the gains they had posted so far this year.
He predicted oil could fall towards $US20 a barrel because of slowing demand from China.
Indicators in the US economy have been mostly positive in recent months – but some investors have feared that the stock market may have jumped ahead of economic growth. Major European stock indices have now fallen more than 10 percent from their peak. On Friday, the preliminary version of the Caixin purchasing managers’ index – a gauge of business activity – fell to an unexpectedly low 47.1 points from July’s 47.8 points on a 100-point scale on which numbers below 50 show a contraction.
Stocks opened with sharp losses Friday morning for the fourth straight day with the Dow falling nearly 300 points.
Meanwhile, investors were still pondering over the ongoing uncertainty about the timing of a rate hike by the U.S. Federal Reserve. The Nasdaq fell 3.5 percent – 171.45 points – to end the week at 4,706.04.
Traders have been anxious about slowing growth in China and its potential impact on the U.S.
KEEPING SCORE: In Europe, France’s CAC-40 declined 1.3 percent to 4,724 while Germany’s DAX fell 1.4 percent to 10,288.
Analysts at Societe Generale said: “Be it via the crash on the equity market or the surprise FX regime change, China has sent shockwaves through global markets and raised numerous questions on the outlook”.
Officials at the Fed will also have to weigh the seriousness of the turbulence in the markets as they decide whether to raise interest rates for the first time in nine years. Economists expect the country’s GDP to contract by more than 2% this year.
Deere fell 8 percent to $83.34 after the tractor maker’s quarterly profit declined 40 percent.
The S&P 500 stuck within a range roughly tracking its 50-, 100- and 200-day moving averages, boosted by signs the economy is recovering and support from central banks.
The pan-European FTSEurofirst 300 index fell 1.8 percent to 1,450.18 points, its lowest level since January and on course for its biggest weekly fall of the year.
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“This market won’t have legs until we have further clarity on the Chinese currency and US rates – right now we have neither”, said Michael Ingram, a market strategist at BGC Partners in London.
