August 2015 – FINANCIAL – U.S. stocks plunged in the last hour of trading Tuesday to wipe out a day-long rally, adding fresh uncertainty to markets that had seemed to be on the rebound. The wild swing highlighted investors’ anxieties over an expansive Chinese slowdown and hinted at fault lines in a U.S. economy otherwise seen as strong. The surprising setback dropped the Dow Jones industrial average more than 650 points from its midday peak, its biggest reversal since 2008, and pushed the index of 30 blue-chip stocks down 204 points, or about 1 percent, to 15,666.44.
Investors had spent most of the day climbing back from a dismal Monday and from several days of carnage in Chinese stock markets. China’s central bank on Tuesday cut interest rates in a bid to stimulate the country’s economy, and for a while, that appeared to reassure European and U.S. markets. But by late afternoon, Wall Street went back into selling mode, as lingering fears about a slowdown in the global economy undercut the brief surge of confidence. “We all looked at each other and said, ‘Huh?’ If you didn’t look in the last 30 minutes, you missed it,” said Meg Green, the chief executive of Meg Green & Associates, a Miami wealth-management firm that handles more than $750 million in assets.
She guessed that the late turnaround came from either pre-programmed trading or “a lot of people who looked at the markets and said, ‘You know what? I’m going to take my bounce profits and go home.’ ” The selloff extended a six-day losing streak and suggested more turmoil to come. “Volatility will remain elevated here in the coming weeks,” said Adam Burch, a market investment director for U.S. Trust. “People have become emotionally engaged and aren’t looking objectively at the market.” Both the Standard & Poor’s 500-stock index, a broader sample of the market, and the Nasdaq composite, an index dense with tech stocks, slid about 1 percent. All Dow stocks pocketed solid gains in the morning, but the index ended the day at an 18-month low. The earlier rally had been fueled not only by interest-rate cuts in China, but also by promising news at home, including new data that showed boosts in new-home sales and improving consumer confidence. But the depth of China’s troubles weighed on U.S. traders. In China on Tuesday, authorities appeared powerless to prevent a further slide in the country’s ailing market, as China’s main share index plunged for a fourth day in a row.
The main Shanghai share index opened Tuesday more than 6 percent lower and reached an eight-month low. A slight recovery was not sustained, and it ended 7.6 percent down. “At the moment, there’s panic in the market because we have lots of retail investors,” said Wei Wei, an analyst at Huaxi Securities in Shanghai. “We’ve never experienced anything like this in China’s stock market, the speed of the decline and the scale of it.” –Washington Post