U.S. Stocks Tumble Following Turmoil in Chinese Market

“When we talk developed markets, Japan is the most heavily exposed to China, with Europe being in the middle, and last is the U.S”. Trading on the Shanghai Composite was again cut short on Thursday after it fell 7.3 percent, triggering “circuit breakers” that automatically halt activity when stocks fall at least 5 percent.

The price of oil sank to its lowest level in 12 years Thursday.

Apple sank by 4.25 points, or 4.2%, to close at $96.45. The market recovered from heavier losses early in the morning.

BEIJING (AP) – Chinese stocks were volatile Friday and other Asian markets rebounded a day after a sharp sell-off in China rattled global markets.

“It’s scary when you see the second largest economy on the planet seemingly melting down”, said Brad McMillan, chief investment officer at Commonwealth Financial in Waltham, Massachusetts.

Financial stocks slumped. Citigroup gave up $2.09, or 4.2 percent, to $48.03. The Standard & Poor’s 500 index rose 5 points, or 0.3 percent, to 1,948. The Nasdaq composite index fell 78 points, or 1.6 percent, to 4,755.

While the Nasdaq is so far the only major US index to enter a correction, the other two are getting close.

The picture is similarly gloomy on Wall Street, with the S&P 500 losing 2.4 percent on Thursday, with 40 percent of the stocks in the benchmark trading 20 percent or more off of their highs, the definition of a bear market.

“The great concern for global markets is that the dramatic pace of the currency devaluation seems to indicate a far greater weakness in the Chinese economy than is easily perceivable in its publicly released statistics”, Nicholson said. Britain’s FTSE 100 lost 1.5 percent.

JOBS REPORT: The Labor Department said the USA employers added 292,000 jobs in December. In December the Fed raised rates for the first time in nine years, but interest rates are still very low. Technology company and retailers made the largest advances.

Nikkei futures were down 2.7 per cent and in Europe the FTSEurofirst 300 closed down 1.3 perc ent. AbbVie fell $1.28, or 2.2 percent, to $55.93 and Endo International shed $1.99, or 3.5 percent, to $54.37.

The dismal start to the new year comes as investors worry that China’s huge economy is slowing down. Those worries about China have drowned out signs that the economies of the USA and Europe are doing fairly well.

Thursday’s selling came after the Chinese government allowed its currency to weaken against the dollar in a reflection of sluggishness in the country’s giant economy. Worries about China have been driven by a decline in the value of the yuan and disappointing economic data.

A slowdown in China is seen as a threat by many investors because the country has been the main engine of global economic growth for years, particularly during the depths of the Great Recession.

Department stores were among the biggest losers on the S&P 500. “China’s stock market reform will remain a messy affair”.

Gold prices edged up 1.1 percent to $1,089.80 an ounce, and shares of Newmont Mining gained 27 cents, or 1.5 percent, to $18.70. E-commerce giant Amazon rose $10.90, or 1.8 percent, to $618.14.

STILL FALLING: Oil prices, which have fallen to their lowest prices in more than a decade, also lost ground.

The price of copper fell 6.6 cents, or 3.2 percent, to $2.022 a pound. Macy’s lost 63 cents, or 1.7 percent, to $36.26.

The Australian dollar, often used as a liquid proxy for China trade, licked wounds at $0.7016, having fallen to a three-month low of $0.6981, which represented a 4.2 percent fall from the end of previous year.