China worries weigh down US stocks in midday trading

Strategists and traders, noting the lack of major U.S. economic news on Thursday, said the drop in stocks was also likely tied to programmed selling, which came after the S&P 500 moved below one of its most closely watched indicators, a 200-day moving average.

The Dow Jones industrial average fell 196 points, or 1.1 percent, to 17,152 as of 12 p.m. Eastern time Thursday. Some investors fear problems in China and other developing nations will spill over to the U.S. and Europe, slowing growth and complicating the Federal Reserve’s plan to raise U.S. interest rates later this year for the first time since 2006. The finance index also moved into negative territory for the year, after falling 1.45 per cent on speculation that the Fed would not raise interest rates in September. Oil is trading at near six-year lows, which in turn has hammered energy and oil stocks like Chevron, Exxon Mobil and Transocean. “Investors are being much more cautious and not as sure that the Fed will be there”.

The minutes from the Fed’s July 28-29 meeting indicated that the Fed was close to raising interest rates but some policymakers said they still needed to see further improvement in the economy and labor market.

The S&P 500, meanwhile, lost 17.31 or 0.83% to 2,079.61, as eight of 10 sectors closed in the red.

ENERGY: Oil prices rose 13 cents to $41.39 a barrel in New York.

China’s stock market woes have been going on for more than two months, when the Shanghai Composite index began to decline even more rapidly than it had been climbing.

Nasdaq 100 e-minis were down 32 points, or 0.71 percent, on volume of 34,246 contracts. While the minutes overall revealed few surprises the recent devaluing of China’s currency and the spotlight on the strengthened dollar’s effects on inflation and domestic production brought about closer scrutiny on the Fed’s analysis of global factors influencing its plans for a rate increase.

NAR said existing home sales climbed 2.0 percent to an annual rate of 5.59 million in July from a downwardly revised 5.48 million in June. The Nasdaq fell 141 points, or 2.8 percent, to 4,877.

About 7.9 billion shares changed hands on U.S. exchanges, above the 6.7 billion daily average so far this month according to BATS Global Markets data.

The yield on the benchmark U.S. 10-year Treasury bond fell 0.035 of a percentage point to 2.094%.

Wall Street took a pounding overnight, as investors panicked about how a deceleration in the Chinese economy would manifest as slower global growth. TWX -5.04% fell 5% to $73.90, leading a rout in media stocks after a Bernstein downgrade that cited a massive structural upheaval in the industry. The DAX in Germany, the CAC in France, and the Euro Stoxx 50 all fell more than 1%.