Companies that primarily drill for oil onshore in the U.S., such as Continental Resources, have suffered even steeper declines. “This is about growth“.
Stocks began falling last week when China announced that it was devaluing its currency, the yuan. China, the world’s second largest economy, is showing increasing signs of distress. Wall Street was mixed, with futures for the Dow Jones industrial average down 0.1% and the Standard & Poor’s 500 index up by a similar margin. That’s 10 percent off its high, a correction.
The Nasdaq Composite fell 171.45 points, or 3.5%, to 4,706.04 for a weekly drop of 6.8%, the biggest weekly decline since August 2011.
Q: Are corrections a normal thing for the market? “China is definitely slowing and what happens there matters”.
Those worries are valid, said Jeremy Zirin, head of investment strategy at UBS Wealth Management.
Investors pointed to other reasons behind the recent sell-off, such as falling prices for oil and other commodities as well as the relatively high prices investors pay for U.S. stocks compared with corporate earnings.
“All of this is coming at a time when we haven’t had a correction” in many years, Zirin said.
Despite these dire numbers, it’s worth remembering that U.S. stock indexes hit record highs earlier this year, after logging double-digit gains in each of the last three years.
World stock markets will open on Monday seeking to recover from the worst one-day falls in almost four years.
Apple, still by far the most valuable U.S. company, fell 4.6 percent to $107.44, the biggest drag on the S&P and the Nasdaq.
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.
Markets in countries whose economic fortunes are closely linked to China’s growth plunged during the trading session. And Europe’s economy appears to be emerging from its long slump.
Nonetheless, overall trading activity may be somewhat subdued on a summer Friday, potentially exaggerating any moves by the markets.
Hewlett-Packard fell 1.9 percent to $26.84, a day after it reported a drop in revenue for the fourth straight quarter. In Britain, the FTSE 100 index was down 1.5 percent. China’s Shanghai Composite index tumbled 4.3% on the news. Tokyo’s Nikkei 225 was off 3 percent at 19,435.83 while Seoul’s Kospi shed 2 percent to 1,876.07 and Hong Kong’s Hang Seng retreated 1.5 percent to 22,409.62.
Yields on safe-haven U.S. Treasuries slipped further, with the benchmark 10-year note rising 10/32 in price, pushing its yield down to 2.0487 percent. Against the euro, the dollar fell 0.85% to $1.1336. The contract settled up 0.8 per cent at $US41.14, while Brent crude settled down 1.2 per cent at $US46.62.
Crude oil fell again as oversupply from members of the Organisation of the Petroleum Exporting Countries in particular continues to overwhelm slowing demand. Investors who once flocked to emerging-markets like Brazil and Russian Federation now shun them.