A “correction” is a Wall Street term for when an index like the Dow industrials or the Nasdaq – or an individual stock – falls 10 percent from its most-recent high. Crude oil briefly dipped below $40 a barrel for the first time since March of 2009.
Signs of a sharp slowdown in the world’s second-largest economy have unnerved investors since Beijing surprised markets last week by devaluing its currency.
The Dow Jones Industrial Average declined 531 points, or 3.1 per cent, to close 16459.75.
Adding to the worries, the Chinese markets showed another steep decline overnight, with the Shanghai Composite Index plunging by 4.3 percent.
BROAD DROP: All 10 sectors of the S&P 500 fell, led by a 1.9 drop in information technology shares.
The market turmoil has some traders exercising caution. A stock is considered to be oversold if the RSI reading falls below 30. “Nimble…is the new black”. And Europe’s economy appears to be emerging from its long slump.
Apple entered bear territory, with their closing price down more than 20 percent since its April 28 high. The Dow closed at 16,451, down 3.12 percent today alone.
To make matters worse, on Friday, Markit reported that the Caixin Flash China General Manufacturing PMI fell to 47.1 in August, hitting a 77-month low.
Back in the U.S., government bond prices rose, pushing the yield on the 10-year Treasury note down to 2.04 percent.
Deere (DE) cut its outlook for fiscal 2015, with the world’s biggest maker of farm equipment projecting sales of equipment falling more than initially forecast, as prices for corn and soybeans fell.
Taipei fell 3.02%, or 242.89 points, to 7,786.92; Taiwan Semiconductor Manufacturing Co shed 3.97% to Tw$121.0 while Fubon Financial Holding lost 3.02% to Tw$49.85.
Wall Street is headed for its worst week of the year as concerns over the health of the global recovery continue to dominate investor sentiment.
“The Chinese have created an air of fragility around the globe”.
THE QUOTE: “China has been on a mission to keep up the illusion of a gradual slowdown, but dealers aren’t buying it anymore”, said David Madden, market analyst at IG. South African stocks slipped 1.5 percent in Johannesburg on Friday for the biggest weekly decline in four years.
The devaluation of the yuan last week has shaken confidence in the world’s No. 2 economy.
Until recently, investors seemed willing to shrug off any worrying news, confident that low interest rates from the Federal Reserve and rising corporate profits would help push stocks higher. That’s dredging out the market’s worst enemy: uncertainty.
“We won’t accept being in the euro area and having bail-out programs imposed on us”, said the firebrand Marxist mathematician.
Markets opened the day deep in negative territory but pared some of those losses by mid-morning.
ENERGY: Benchmark U.S. crude fell 55 cents per barrel to $40.76 in electronic trading on the New York Mercantile Exchange.
The pan-European Stoxx 600 (^STOXX) was trading 1.6 percent lower. Earlier it fell to as low as $US4,992.50 a tonne, just $US16 above Wednesday’s six-year low.