U.S. Stocks Join China-Fueled Equities Rout as Crude Declines

The worst start to a year in global stocks since 2000 extended to a fourth day, with the Dow Jones Industrial Average losing more than 200 points, as turmoil emanating from China spread around the world and billionaire George Soros warned that a larger crisis may be brewing.

The Dow average headed for its third drop of more than 1 percent this week, and developing-nation markets tumbled 2.5 percent. Chinese shares fell 7 percent after the central bank weakened the yuan an eighth day. Crude sank toward $ 33 a barrel in New York and copper dipped below $ 2 for the first time since 2009. The yen reached a four-month high and gold surged on haven demand. Treasuries weakened on speculation China will sell U.S. debt to raise cash.

The Standard & Poor’s 500 Index slid 1.5 percent at 12:39 p.m in New York. The index is down 4 percent this year. The MSCI All-Country World Index fell for a fourth day, bringing its slide this year to 4.8 percent.

China’s devaluation revived the angst that sent financial markets into turmoil last summer, driving U.S. stocks to three-month lows Wednesday in a selloff led by commodity producers. Comments by Soros exacerbated market jitters after he told an economic forum in Sri Lanka today that global markets are facing a crisis and investors need to be very cautious.

Source: Bloomberg

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Dow Average Falls 300 Points in China-Fueled Global Equity Rout

U.S. stocks extended their three-month lows, with the Dow Jones Industrial Average dropping more than 300 points amid a China-led rout that continued to engulf equities around the globe.

The Standard & Poor’s 500 Index slid 1.7 percent to 1,956.58 at 9:34 a.m. in New York, on track for its lowest level since Oct. 2. The Dow lost 308.69 points, or 1.8 percent to 16,597.82 after yesterday capping its worst three-day start to a year since 2008.

Equity markets worldwide tumbled after Chinese stock exchanges closed less than a half hour after opening, as a more than 7 percent plunge triggered a market-wide halt for the second time this week. European stocks tumbled as much as 3.6 percent.

A flight from risky assets in the first week of the new year has wiped more than $ 2.5 trillion from global equities, made worse by China’s central bank cutting its yuan reference rate for an eighth straight day. China’s tolerance for a weaker yuan is being seen as evidence policy makers are struggling to revive an economy that’s the world’s biggest consumer of energy, metals and grains.

The move revived the angst that sent financial markets into turmoil last summer, driving U.S. stocks to three-month lows yesterday in a selloff led by commodity producers. Comments by billionaire George Soros exacerbated market jitters after he told an economic forum in Sri Lanka today that global markets are facing a crisis and investors need to be very cautious.

A weaker yuan would support China’s flagging export sector, but it also boosts risks for the nation’s foreign-currency borrowers, and heightens speculation that the slowdown in Asia’s biggest economy is deeper than official data suggest.

While investors cope with the turbulence sparked by China, another source of consternation is looming as the corporate earnings season for 2015’s final quarter soon begins. Alcoa Inc., JPMorgan Chase & Co. and Intel Corp. are scheduled to report results next week. Analysts forecast profits for companies in the S&P 500 fell 6.1 percent last quarter.

Federal Reserve Bank of Richmond President Jeffrey Lacker reiterated in a speech this morning that the pace of interest-rate increases is expected to be gradual, but dependent on the economic outlook. He also expressed confidence inflation will move back to the Fed’s 2 percent goal “over the near term.” Chicago Fed President Charles Evans also due to deliver remarks on the outlook this afternoon.

A report today showed fewer Americans filed applications for unemployment benefits last week, a sign the U.S. labor market remained robust entering 2016. The government’s December jobs report is due tomorrow, with economists surveyed by Bloomberg forecasting a 200,000 gain and the unemployment rate holding at 5 percent.

Source : Bloomberg

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