The Dow Jones industrial average spiked 241.79 points (1.39 percent) to 17,615.17. Mr Foreman said he hasn’t bought or sold stocks in reaction to China’s currency moves, as he still expects the US market to move higher over the longer run.
The CBOE Volatility Index (VIX – 13.61) gave back early gains to end 0.1 point, or 0.7%, lower, after getting as high as 16.28.
In the absence of any big change to China’s stance, investors were likely looking at the S&P 500’s near-term support level of 2,050 to stage a turnaround, said Mark Luschini, chief investment strategist at Janney Montgomery Scott, in an interview.
The ICE dollar index was down 1% as investors digested the continued slide in the Chinese yuan. General Motors (GM) shares fell 3.5 percent to $30.83, though it said the devaluation of the yuan would have a “limited and manageable” impact on its business. More than half of the stocks in the S&P 500 are trading in correction territory. Germany’s DAX dropped 2.9 percent, France’s CAC 40 dropped 3.1 percent, while Britain’s FTSE 100 lost 1.4 percent.
The Standard & Poor’s 500 index was down 28 points, or 1.2 percent, to 2,056, leaving the benchmark measure flat for the year.
Apple, for which China is a key market, also reversed course after falling more than 3% earlier to its lowest since January. The S&P 500 hasn’t closed up or down more than 3.5 percent from where it started the year as it vacillates between 2,040 and its May record of 2,130.82.
THE QUOTE: “Markets were not expecting any major moves on the currency from the Chinese government, despite its benefits, as the risks were perceived as too high”.
Eight of the S&P 500’s main groups fell today, with energy and raw-materials shares sliding the most and reversing gains yesterday that were the strongest in at least seven months.
Oil prices touched their lowest in more than six months during the day on fresh evidence showing a slowdown in demand in China and report of increasing supply.
S&P 500 futures declined 0.7 percent and are near their lows of the session. The gauge, known as the VIX, rose 10 percent last week after posting its biggest monthly drop since February.
Luxury-handbag makers including Salvatore Ferragamo SpA, which fell on Tuesday in the wake of the China news fell for a second day (http://www.marketwatch.com/story/luxury-handbags-and-shoe-makers-shares-slide-for-a-second-day-on-china- worry-2015-08-12).
Federal Reserve policies can benefit U.S. labor markets but cannot alone solve the so-called skills mismatch between workers and employers, New York Fed President William Dudley said in prepared remarks. Gold futures added 1.4% to $1123.20 a troy ounce.