Slowing economic growth in China hamper momentum
U.S. stocks finished lower on Monday, 28 September 2015 and at their lowest levels since late August as concerns about slowing economic growth in China and mixed domestic economic data unnerved investors. A selloff in biotech stocks added to downbeat sentiment.
The Dow Jones Industrial Average sank 312.78 points, or 1.9%, to end at 16,001.89. The Nasdaq Composite dropped 142.53 points, or 3%, to close at 4,543.97, dragged down by the biotech downdraft. The S&P 500 fell 49.57 points, or 2.6%, to close at 1,881.77, sliding below the 1,900 level for the first time since late August, when the market was rocked by China's move to devalue its currency.
All ten sectors finished lower. The health care sector fared the worst as price control concerns continued to percolate on the back of reports that lawmakers in Washington are working to get a subpoena to obtain documents from Valeant Pharmaceuticals that discuss big price increases for two heart drugs. The weakness in the biotech space took a heavy toll on the Nasdaq Composite. Separately, the weight of large losses in market darlings Facebook, Amazon.com, Netflix , and Google took a big bite out of the Nasdaq and the broader market.
The growth concerns were triggered by an 8.8% year-over-year decline in China's industrial profits, a disappointing 1.4% monthly decline in pending U.S. home sales for August, and a declaration from International Monetary Fund (IMF) head Christine Lagarde that the IMF's forecasts for global growth of 3.3% this year and 3.8% next year are no longer realistic due principally to the weakness in emerging markets.
Today's negative disposition was cemented in the fact that Apple couldn't escape the selling pressure even though it announced record sales of more than 13 million units of its iPhone 6s and iPhone 6s Plus just three days after launch.
More From This Section
Among economic reports for the day, the Personal Income and Spending report for August was decent, showing a 0.3% increase in income (consensus +0.4%) and a 0.4% jump in spending (+0.3%) on top of modest upward revisions to July's data for both series.
The marketplace is still obsessed with the timing of the next interest rate hike from the U.S. Federal Reserve. Remarks from Fed Chair Janet Yellen late last week fell into the hawkish monetary policy camp, as Yellen appeared to lay out a case for a U.S. Fed funds rate rise yet this year. Recent upbeat U.S. economic data, including last Friday's stronger-than-expected GDP report, also fall into the camp of monetary policy hawks and U.S. dollar bulls. Federal Reserve Bank of New York President William Dudley chimed in Monday, saying he, too, thinks the Fed will raise interest rates yet this year.
In other overnight news, reports said the government of Switzerland is investigating seven major banks that may have manipulated the price of gold, silver and other precious metals. The focus is on the spreads between the bid and ask prices for the metals.
Bullion prices settled lower on Monday, 298 September 2015 at Comex suffering from their largest daily loss in nearly three weeks, as a drop in U.S. stocks prompted investors to sell the metal as they sought cash to cover losses. The U.S. stock market was down sharply, and European equities declined as traders fretted about slowing economic growth in China. Asian shares also ended mostly lower.
Gold futures for December delivery gave up $13.90, or 1.2%, to settle at $1,131.70 an ounce on Comex. That was the largest single-day point and percentage loss since Sept. 9. December silver Salso dropped 57.3 cents, or 3.8%, to $14.538 an ounce.
The prospect of higher rates has boosted the dollar and diminished the appetite for gold, which doesn't bear interest. A stronger buck also makes the metal less attractive to investors who purchase dollar-denominated assets in other currencies. On the plus side, strong August import data from China and India data for gold offered some encouraging signs for the yellow metal.
Crude Oil futures settled lower on Monday, 28 September 2015 as signs of slowing global economic growth fed worries about the outlook for energy demand. On the New York Mercantile Exchange, November West Texas Intermediate crude shed $1.27, or 2.8%, to settle at $44.43 a barrel.
Powered by Capital Market - Live News