Wall Street’s best August in nearly a decade came to a disappointing end on Monday as plunging Chinese stocks and tumbling oil prices sent the Dow to a rare two-day losing streak. Both stocks and commodities spent the entire session trading with considerable weakness as a broad-based selling effort took hold following a steep sell-off in China's Shanghai Composite Index.
The Wall Street action came after the market closed on Friday up some 50 per cent from lows hit in March, but with investors beginning to turn cautious. The Shanghai Composite index .SSEC fell nearly 7 percent to a three-month low on fears that China's government is trying to moderate economic growth and choke off speculation in its stock market by tightening bank lending.
The Wall Street action came after the market closed on Friday up some 50 per cent from lows hit in March, but with investors beginning to turn cautious. The Shanghai Composite index .SSEC fell nearly 7 percent to a three-month low on fears that China's government is trying to moderate economic growth and choke off speculation in its stock market by tightening bank lending."China is a very important engine of growth to the rest of the world," said Craig Hester, chief executive of Hester Capital Management in Austin, Texas. "People need to see China continue its growth, and a slowdown in the stock market there will slow us down, too."
Heading into a traditionally soft period of the year for stocks, investors are increasingly becoming more worried about a pullback after a 50 percent rally from multi-year closing lows in March.
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The Dow Jones Industrial Average fell 47.92 points, or 0.50%, to 9496.28, the Standard & Poor's 500 lost 8.31 points, or 0.81%, to 1020.62 and the Nasdaq Composite dropped 19.71 points, or 0.97%, to 2009.06.
Wall Street stocks followed major European stock indices lower in the wake of sell-offs in Asia as investors worried about the Chinese economy and Japanese election results.
In China, the Shanghai Composite index plunged 6.7 per cent, its biggest one-day drop since June 2008, as concerns over slowing lending growth and a new share supply glut weighed on sentiment, dealers said.
On Friday the blue-chip Dow fell 0.38 per cent, snapping an eight-day winning streak. The Nasdaq edged up 0.05 per cent and the S&P 500 slipped 0.20 per cent.
"Widespread losses in foreign markets, which were led by a minus 6.7 per cent decline in the Shanghai Composite, have prompted valuation concerns that are interfering with the bullish sentiment,'' Patrick O'Hare of Briefing.com said.
"We suspect the understanding that September has been the weakest month historically for the stock market hasn't been lost on participants either.''
The question now is whether or not this two-day slide is the start of a “healthy” pullback that even some bulls have been calling for, a one-time blip or a larger selloff like the one in China.
“I personally think it’s going to continue for a while,” remark NYSE trader Ben Willis of VDM Institutional Brokerage , adding that he sees the S&P testing the 1000 level. “That’s not really a bearish a call. I think it’s very healthy for a bull market to be able to have pullbacks where you can regroup before you march forward.”
Oil Swoon Below After Chinese Stocks Spiral.jpg)
Skepticism for the strength of the global economic recovery pushed oil below $70 a barrel on Monday.
Benchmark crude for October delivery lost $2.78 to settle at $69.96 on the New York Mercantile Exchange, the first time oil has ended a trading day below $70 in about two weeks.
Commodity traders seem to be wary of a full blown recovery. Specifically, concerns are being raised about China, where government officials have suggested they might scale back on lending, a move that would certainly curtail growth.
Chinese stocks are way down with the latest 6.7% Shanghai Composite Index spiral.
“Despite the winning ways of the US stock market, oil traders are increasingly focused on Asia which has had a rough go as of late,” PFGBest analyst Phil Flynn wrote in a report.
“Last week China raised red flags for the commodity bulls as they seemed to suggest they would cut back on bank lending in coming months, essentially removing some of the unprecedented stimulus they have added to the Chinese economies,” Flynn added.
“Not only that, they said they were studying ways to reduce over capacity in commodity consuming industries, lowering oil demand expectations. The market is concerned whether or not the Chinese government can engineer a soft landing.”
Oil has traded near $70 a barrel for most of the last few months as investors struggle to gauge how robust the U.S. recovery will be. Crude has tried and failed several times to break through the $75 level, held back by key fundamentals that remain bearish.
Today's MarketsThe Dow Jones Industrial Average fell 47.92 points, or 0.50%, to 9496.28, the Standard & Poor's 500 lost 8.31 points, or 0.81%, to 1020.62 and the Nasdaq Composite dropped 19.71 points, or 0.97%, to 2009.06.
Wall Street stocks followed major European stock indices lower in the wake of sell-offs in Asia as investors worried about the Chinese economy and Japanese election results.
In China, the Shanghai Composite index plunged 6.7 per cent, its biggest one-day drop since June 2008, as concerns over slowing lending growth and a new share supply glut weighed on sentiment, dealers said.
On Friday the blue-chip Dow fell 0.38 per cent, snapping an eight-day winning streak. The Nasdaq edged up 0.05 per cent and the S&P 500 slipped 0.20 per cent."Widespread losses in foreign markets, which were led by a minus 6.7 per cent decline in the Shanghai Composite, have prompted valuation concerns that are interfering with the bullish sentiment,'' Patrick O'Hare of Briefing.com said.
"We suspect the understanding that September has been the weakest month historically for the stock market hasn't been lost on participants either.''
The question now is whether or not this two-day slide is the start of a “healthy” pullback that even some bulls have been calling for, a one-time blip or a larger selloff like the one in China.“I personally think it’s going to continue for a while,” remark NYSE trader Ben Willis of VDM Institutional Brokerage , adding that he sees the S&P testing the 1000 level. “That’s not really a bearish a call. I think it’s very healthy for a bull market to be able to have pullbacks where you can regroup before you march forward.”
Oil Swoon Below After Chinese Stocks Spiral
.jpg)
Skepticism for the strength of the global economic recovery pushed oil below $70 a barrel on Monday.
Benchmark crude for October delivery lost $2.78 to settle at $69.96 on the New York Mercantile Exchange, the first time oil has ended a trading day below $70 in about two weeks.
Commodity traders seem to be wary of a full blown recovery. Specifically, concerns are being raised about China, where government officials have suggested they might scale back on lending, a move that would certainly curtail growth.
Chinese stocks are way down with the latest 6.7% Shanghai Composite Index spiral.
“Despite the winning ways of the US stock market, oil traders are increasingly focused on Asia which has had a rough go as of late,” PFGBest analyst Phil Flynn wrote in a report.
“Last week China raised red flags for the commodity bulls as they seemed to suggest they would cut back on bank lending in coming months, essentially removing some of the unprecedented stimulus they have added to the Chinese economies,” Flynn added.
“Not only that, they said they were studying ways to reduce over capacity in commodity consuming industries, lowering oil demand expectations. The market is concerned whether or not the Chinese government can engineer a soft landing.”
Oil has traded near $70 a barrel for most of the last few months as investors struggle to gauge how robust the U.S. recovery will be. Crude has tried and failed several times to break through the $75 level, held back by key fundamentals that remain bearish.
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