Late Tumble in US Stocks Dashes Hopes for Rebound

The three indexes closed lower three days in a row as investors wrestled with uncertainty over increased signs of a slowdown in China’s economy and the timing of a long-expected interest rate hike by the Federal Reserve.

Experts have warned that there could be worse to come, as the large falls in global stock markets are seen by many as a “correction” in values after indexes climbed to record highs over the past year.

U.S. S&P 500 mini futures ESc1 fell 0.7 percent to 1,858.75, edging closer to Monday’s 10-month low of 1,831.

Chinese stocks bounced around Wednesday before ending weaker for the fifth day running.

A sharp sell-off in the final hour of trading Tuesday drove the Dow down by more than 200 points. US stocks fell 1.4 percent on Tuesday.

Markets have been volatile since China made a decision to weaken its currency earlier this month.

The central bank said the moves were aimed at supporting the real economy amid downward pressure on growth and fluctuations in global financial markets. The lighter fluid on the flame was that China cut interest rates. The Fed isn’t expected to deliver a policy update until it wraps its next meeting of policymakers on September 17. Investors were also following the latest corporate deal and earnings news. “We do not rule out a big-bang stimulus package of measures – monetary, fiscal and stock market stabilization – to generate a maximum signaling effect”.

European markets recovered nearly all their losses from Monday’s sell-off. “But we’re still beholden to events in China“. Shares of Alibaba, the Chinese e-commerce giant, rose 4.18 percent in the early trading.

Copper, often considered a proxy for global economic activity, rose 2.3 percent.

Japan’s main Nikkei 225 stock index ended the morning up 0.5 per cent at 17,896.23, while Hong Kong’s Hang Seng index dipped in early trading but was up 0.2 per cent at 21,444.73. Other big winners include Abercombie & Fitch and Express after both retailer’s reported profits that exceeded expectations. Abercrombie & Fitch jumped 8.6 percent, while Express surged 14.6 percent. Germany’s DAX lost 1.1 percent, France’s CAC 40 was down 1.2 percent, and the U.K.’s FTSE 100 was 1.2 percent lower.

China’s central bank has stepped in after the Shanghai Composite Index sank more than 7 percent for a second day. Benchmark US crude fell 20 cents to $39.11 a barrel in New York. Shares also rose in Taiwan.

Traders have been putting their money in investments they consider safer, including government bonds and gold. The yield on the 10-year Treasury note rose to 2.16 percent from 2.07 percent late Tuesday. Average daily trade volume month-to-date is 7.5 billion shares, with high-frequency trading accounting for 49 percent.