Wall Street’s slide unlikely to undermine support for US stocks

An index is said to be in correction when it closes 10 per cent or more below its 52-week high. All major bourses were off a similar amount.

The S&P index has accumulated 9.95 percent of losses in just five sessions, a correction analysts had been arguing was long overdue and a missing link of a healthy market.

The S&P 500 earnings outlook improved as well: Second-quarter expectations now are for a 1.3 percent increase, sharply above the 3 percent decline expected at the start of last month.

A semblance of normality is set to return to US markets today and futures trading points to stocks rallying in early deals.

The slump – part of a global wave of selling touched off by signs of a slowdown in China, the world’s second-largest economy – triggered worries among Wall Street professionals and ordinary Americans who are saving for retirement or a down payment on a house. Doing so in this volatile time would make global markets nervous.

It’s a stark reminder that China’s economic well-being, or the lack thereof, can have a mighty big impact on the bottom lines of companies here in the U.S.

“I’ve been of the view since late previous year that this market is in a vulnerable position”, he said.

By contrast, U.S. investment grade bond funds are down 0.19% as a group from May 19 through August 21, according to Morningstar. “We were buying a lot of blue chip names, down 5 to 10 percent”.

U.S. Treasurys surged as investors bought less risky assets. The stock had slumped as much as 13 percent on Monday, before ending down 2.5 percent.

Oil prices were up about 3 percent, bouncing back from heavy losses on Tuesday, but U.S. crude still remained below $40 per barrel. The benchmark index hasn’t had a by-the-book correction in about four years.

“This can all be intimidating”. Cheaper gasoline, the labor market has been adding jobs, the housing market has been getting back on feet.