The Dow did rally from that point and ended the day down 588 points.
The TSX was the exception in North America with Canada’s benchmark stock index closing up 98 points to 13,150. The Shanghai Index fell 8.5 percent and on Wall Street the mood was grim.
China’s dimming outlook is drawing calls for more economic stimulus from Beijing, though earlier government efforts to stop the sell-off in stocks appear to have done little to stabilize markets.
It cut its interest rates for the fifth time in nine months in a renewed effort to shore up economic growth. Gold futures held at $1,159 an ounce, down 60 cents, or less than 0.1 percent.
While stocks are at their “most oversold point since the summer of 2011”, and are due for a bounce, Valeri adds, it still doesn’t guarantee the period of heightened market volatility is over.
“You knew something was not right”, Bilkie said.
Wall Street’s selloff on Monday, sparked by a near-9% dive in Chinese shares, was a long-overdue correction that analysts said is unlikely to undermine support for U.S. stocks going forward.
“A lot of what traders are focused on is what they think other people are thinking”, says Kotlikoff, a William Fairfield Warren Distinguished Professor and a College of Arts & Sciences professor of economics.
Germany’s DAX and France’s CAC-40 also rose. Stocks were up 3 percent in London, 4 percent in Frankfurt and 4 percent in Paris. The Standard & Poor’s 500 index slid 77.68 points, or 3.9 percent, into “correction” territory – jargon for a drop of at least 10 percent from a recent peak.
U.S. stocks rebounded sharply on Tuesday as investors sought out bargains a day after Wall Street turned in its worst performance in four years. Doing so in this volatile time would make global markets nervous.
“What investors are trying to figure out is which countries export the most to China and are going to be negatively affected by the slowdown in China“, he told CBC News.
Among positives he and others cited, the U.S. economy has been seen on strong enough footing to warrant a Federal Reserve interest rate increase, with many expecting one before the end of the year.