U.S. Stocks Plunge at Open After Chinese Stock Rout

It’s ugly. But before you panic, let’s put this in perspective. “As it stands, the FTSE 100 is on course to post its biggest weekly decline of the year so far and there’s not a great deal on the agenda that would appear to have the ability to salvage the situation before the weekend break”, he said.

[Stock market plunge wipes out this year’s gains]. “It’s probably going to be a bad week”. The Dow (DJI) had tumbled more than 1,000 points right after the open, before recouping more than half of that drop. That’s never happened before.

The knock-on effect of this drop could also be felt across the globe. The Dow has never lost more than 800 points before; the biggest drop was 777 points, on September 29, 2008. Dow e-minis were down 608 points, or 3.69 per cent, with 136,791 contracts changing hands. Stocks are still down sharply, but have bounced off early session lows. Stocks have been rising – a bull market – since early March 2009.

It’s hard to be too confident that 1900 is a buying opportunity for the S&P 500 when you remember that it was trading well below 1000 less than seven years ago. The technical definition of a correction is a 10% drop from a recent peak.

Key technical support levels were broken on the Nasdaq, the Dow and the S&P 500 in the past two trading days. They peaked in the spring and have lost over 10% since then.

Since closing at $61.01 on June 23, contracts for a North American benchmark crude have been losing ground due to an oversupply and concerns about economic demand. They are natural – kind of like needing to tap the breaks on a bike or vehicle sometimes.

U.S. stock markets plunged as the trading day began, with many wondering how long the massive selloff would last.

Alibaba fell 4.1 percent to $65.39, well below its IPO price of $68, making it the second high-profile tech company to fall below its IPO price in the past week after Twitter on Thursday. “U.S. exports to China are a tiny fraction of our GDP, and to the extent commodity prices are pushed down, that’s positive for the U.S. economy”.

Is it the beginning of another stock market collapse?

The crisis in China is also affecting more and more emerging economies in Asia.

Fears of a slowing global economy combined with a glut of oil on world markets sent the price of crude oil down to a more-than-six-year low on Monday.

All 20 of the top 52-week high traders on the NYSE were ETFs that uniformly contained the word “short” in their names. The Dow is down about 13%. But clearly, the sell-off in global markets and the anxiety this is triggering is exercising the very top economic minds in the world’s biggest investment banks.

Chinese authorities issued notice to state media to censor negative market reports about the hefty losses, the Hong Kong-based South China Morning Post reported.