Slowing global growth set negative tone amid market sentimnets
U.S. stocks finished sharply lower on Tuesday, 22 September 2015 rebounding off intraday lows, as a slump in commodity prices reignited festering worries about slowing global growth. The focus on global growth, and China in particular, has intensified after the Federal Reserve last week chose to stay pat on interest rates, citing concerns about an economic slowdown abroad.
The Dow Jones Industrial Average dropped 179.72 points, or 1.1% to 16,330.47, after being down as many as 288 points. The Nasdaq Composite lost 72.23 points, or 1.5%, to finish at 4,756.72, after sinking as many as 112 points. The S&P 500 index slid 24.23 points, or 1.2%, to finish at 1,942.74.
All 10 main sectors ended lower. Materials and technology stocks suffered the most. Out of the 30 components in the blue-chip index, 27 closed lower, headlined by United Technologies and Goldman Sachs.
Equity indices spent the duration of the session in the red after gapping lower at the start. The opening stumble occurred in response to continued concerns about China's economic growth, which was manifested through weakness in commodity prices. Furthermore, European automakers struggled with Volkswagen plunging 19.8% to extend this week's loss to 34.7% after announcing the establishment of a EUR6.50 billion reserve in anticipation of costs associated with the Department of Justice probe into the company's diesel engines. European markets registered losses across the board with Germany's DAX tumbling 3.8%.
Asian stock markets finished firmer, with China's Shanghai stock index up 0.9% on the day. Other Asian stock markets also closed firmer on Tuesday. Asian traders are awaiting a manufacturing report from China due out Wednesday. There was also an upbeat mood in China markets as the Chinese premier visits the U.S. this week.
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On Tuesday Credit Suisse downgraded some mining shares and cut forecasts on commodity prices amid concerns about demand from China. The Asian Development Bank on Tuesday lowered its forecast for China's annual economic growth this year to 6.8% as pressures on the economy increased, from a previous forecast of 7.2%.
Switching gears, Treasuries rallied into the afternoon, erasing their losses from yesterday with the 10-yr yield falling seven basis points to 2.14%.
Economic data was limited to the FHFA Housing Price Index for July, which rose 0.6% to follow last month's 0.2% uptick.
Today's participation was ahead of recent averages as more than 900 million shares changed hands at the NYSE floor.
Bullion prices ended lower at Comex on Tuesday, 22 September 2015. Gold futures settled lower for a second straight day on Tuesday, as the dollar ticked higher on expectations that the Federal Reserve will raise benchmark interest rates sometime this year.
Gold futures for December delivery gave up $8, or 0.7%, to settle at $1,124.80 an ounce on Comex. Prices lost 0.4% on Monday after gaining 1.9% on Friday. On Comex, December silver also dropped 46.5 cents, or 3.1%, to $14.756 an ounce.
Crude oil futures settled lower on Tuesday, 22 September 2015 as a slumping U.S. stock market fed concerns that the outlook for energy demand will continue to soften. Prices, however, pared some of their losses by the settlement as petroleum-products futures took a last minute turn higher following a report that Colonial Pipeline Co. has shutdown petroleum-product pipelines. The moves come ahead of weekly data that are expected to show a second straight weekly decline in U.S. crude supplies and a day after oil prices posted strong gains.
The October contract for West Texas Intermediate crude settled at $45.83 a barrel on the New York Mercantile Exchange, down 85 cents, or 1.8%, on its expiration day.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET.
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