“There’s no shortage of things people can cite, from the movement in currencies, to the weakness in commodities and fears about China“, Lee said. “This is about growth“. Gold futures rose as the selloffs spurred a flight to safety, with the yellow metal posting its biggest one-week gain since January to end at a six-week high. It fell more than 1,200 points in August and had a more than 10-percent decline since its all-time high in May.
Behind that were signs Beijing is struggling to prevent a stall in the world’s second largest economy, and that its actions, like the devaluation of the Yuan last week, was having a negative impact throughout emerging markets and would drag in developed economies as well. The new bout of selling followed news of a survey showing manufacturers on the mainland continue to contract. The Standard & Poor’s 500 index dropped 16 points, also 0.8 percent, to 2,019.
The Dow closed at 16,459.75, down 530.94 points or 3.12%. Currently, the S&P is about 6.3% off its high.
Clearly, there is lots of softness in the stock market, and the recent swoon seemingly spared no one.
US stocks were heading for their worst week since 2012, thanks to a sell-off sparked by global growth worries, while US oil prices headed for their eighth consecutive week of falls, marking the longest losing streak in 30 years. Even the most bullish of market strategists will say a correction is ultimately healthy for a market because it removes some of the froth and speculation.
The three key US indices were, after two days of heavy selling, all below where they started 2015, after repeatedly punching through record highs during the past eight months. Fears of the Fed Rate hike were already there. Sydney’s S&P ASX 200 lost 1.7 percent to 5,198.20 and India’s Sensex declined 1.3 percent to 27,237.62. The S&P 500 has more than tripled in value since the financial crisis.
Will the Fed raise rates in September?
“They have the luxury of being able to wait and see what happens”, Perli said.
This emerging market nerves are adding to unease about the overall picture for global growth.
The rout started in Asia and quickly spread to Europe, battering major markets in Germany and France. Japan’s Nikkei declined 2.9 percent, 5.2 percent on the week.
Stocks in China dropped, with the Shanghai Composite Index finishing down 4.3 percent.
The Hang Seng index in Hong Kong was down 2.4 percent for a weekly loss of 7.4 percent.
Yields on safe-haven US Treasuries slipped further, with the benchmark 10-year note rising 12/32 in price, pushing its yield down to 2.0417%.
On the New York Mercantile Exchange, West Texas Intermediate oil for October delivery fell below $40 a barrel for the first time since 2009, before ending at $40.45, down 2.1 percent. Friday’s fall, to $39.86, was just the latest indicator of a vast shift in the energy landscape over the past year. Both are at six-year lows. “It’s still an open question on whether they would move in September or not”.
Some argue that this isn’t necessarily bad news. The index came on the heels of worse-than expected July data on exports, industrial output and retail sales from that nation, the world’s second-largest economy.
Yet for the US, the tumult overseas is unlikely to have a material effect on its economy, barring a financial market catastrophe abroad.