Dow dives as China, oil fears grip markets

China’s main stock market, the Shanghai Composite Index, has fallen 20 percent from its recent market high.

That slump worsened Wednesday, pushing the S&P 500 index into what’s known as a correction, or a drop of 10 percent or more from a peak. While consumer stocks were down through the day, other sectors, including energy and industrial stocks, turned negative around midday.

US markets opened sharply lower today after oil prices fell below $30 a barrel.

Netflix and Amazon, the market’s two biggest winners previous year, took a beating.

After bouncing up and down around early Thursday, the Dow Jones Industrial Average climbed 228, or 1.4 percent.

Contracts on the Standard & Poor’s 500 Index expiring in March added less than 0.1 percent to 1,882 at 7:30 a.m.in NY. The Nasdaq composite added 44 points, or 1 percent, to 4,570. FactSet estimates Q4 profits for S&P 500 companies will come in 5.3% lower than a year ago, and this has not been overlooked by investors.

A separate Labor Department report showed import prices fell 1.2 per cent in December from the prior month, the sixth straight monthly decline.

Friday’s moves came after Wall Street saw its biggest one-day gain of the year on Thursday, as investors stepped in to buy up hard-hit corners of the market after a bruising start to the year. GoPro lost $2.36 to $12.25. The UK’s FTSE 100 Index dropped 0.7%, Germany’s DAX Index sank 1.7%, while France’s CAC 40 Index retreated 1.8%. US retail sales fell unexpectedly in December, and the producer price index, a measure of price fluctuations from providers of goods and services, ticked downward – both hinting that the USA economy was weaker in the fourth quarter. Excluding volatile items such as food and energy prices, core prices rose 0.2%. Brent crude traded 1.5 per cent higher at US$30.76 a barrel while United States crude’s West Texas Intermediate traded 55 cents stronger at US$31.03 a barrel.

The Dow is up 32.60 points, or 0.2 percent.

China’s central bank said it pumped $15 billion of funds (http://www.marketwatch.com/story/china-pumps-15-billion-into-market-to-bolster-banking-system-liquidity-2016-01-15) into the market via a medium-term lending facility on Friday. But the USA could be strong.

The CBOE Volatility Index, often referred to as Wall Street’s fear gauge, fell 5.04 percent to end at 23.95 Thursday.

In Asia, Japan’s benchmark Nikkei 225 dived 2.7 percent, South Korea’s Kospi fell 0.9 percent and Hong Kong’s Hang Seng lost 0.6 percent. No particular news sent oil prices higher. The 10-year Treasury yield was unchanged at 2.09%.

BONDS AND CURRENCIES: Bond prices were little changed.

Traders also reacted positively to quarterly results from JP Morgan (JPM), with the financial giant advancing by 1.5 percent.

In other energy trading, wholesale gasoline fell 3.2 cents to $1.053 a gallon, heating oil fell 2.1 cents to 96.9 cents a gallon and natural gas rose 1.2 cents to $2.269 per 1,000 cubic feet.