New round of weak Chinese economic data sparks selloff
U.S. stocks suffered their third-worst loss of the year on Tuesday, 1 September 2015 as part of a global rout sparked by a new round of weak Chinese economic data.
The Dow Jones Industrial Average lost 469.68 points, or 2.8%, to 16,058.35. All 30 of its components closed lower. The S&P 500 sank 58.33 points, or 3%, to 1,913, with all of its 10 sectors in the red. The Nasdaq Composite slumped 140.40 points, or 2.9%, to 4,636.10, falling into negative territory for the year.
The financial and energy sectors led the losses.
Tuesday marked the third-biggest daily drop of the year for the S&P 500 and the Dow, while for the Nasdaq, it is the third worst by percentage decline.
China's official manufacturing purchasing managers index fell to a three-month low, delivering a fresh blow to global markets that have spent August rattled by uncertainty about China's economic health. China's official manufacturing purchasing managers index fell to 49.7 in August from 50.0 a month ago, official data showed. The Caixin China manufacturing purchasing managers index fell to a final reading of 47.3 in August, the lowest in more than six years.
In the U.S., data showed that the final Markit PMI totaled 53.0 in August, down from 53.8 in July. Also, the Institute for Supply Management said its U.S. manufacturing index fell to 51.1% in August from 52.7% in July.
The key outside markets Tuesday saw Nymex crude oil futures prices sharply lower following big gains scored recently. Nymex crude had surged by over $10 a barrel in less than a week. Tuesday's corrective pullback in crude is not surprising given the recent strong gains. The fact that raw commodity sector leader crude oil has shown signs of a market bottom suggests many other raw commodity markets are also likely bottom out, including the precious metals.
Bullion prices settled at their highest level in more than two weeks on Tuesday, 01 September 2015 as a selloff in global stock markets and downbeat economic data helped boost the metal's investment appeal. Prices for the yellow metal had posted declines in five of the last six sessions, as investors weighed prospects for a U.S. rate increase and on fears about China's economic growth linger.
Gold futures for December delivery rose $7.30, or 0.6%, to settle at $1,139.80 an ounce on Comex. In August, gold logged its largest monthly gain since January as investors fretted about recent stock-market declines spurred by China worries. It saw a monthly gain of around 3.4%, which was the largest since January's 8% surge. December silver added 3.4 cents, or 0.2%, to end at $14.62 an ounce.
Crude oil futures fell on Tuesday, 01 September 2015 with weak Chinese manufacturing data dulling the outlook for energy demand and U.S. prices settling lower after tallying a three-session climb of more than 27%.
October West Texas Intermediate crude declined by $3.79, or 7.7%, to settle at $45.41 a barrel on the New York Mercantile Exchange. Prices gave back most of the $3.98, or 8.8%, gain they saw a day earlier. U.S. oil prices tallied a total gain of 27.5% on Thursday, Friday and Mondaytheir largest such rally since Iraq's invasion of Kuwait in August 1990.
The U.S. dollar index was lower on Tuesday. The greenback bulls have faded early this week following good gains scored late last week.
The sell-off invited above-average trading volume as more than a billion shares changed hands at the NYSE floor.
Interestingly, Treasuries set their highs during overnight action and spent the day just below those highs while equities retreated. As a result, the 10-yr yield fell five basis points to 2.17%.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the August ADP Employment Change survey (Briefing.com consensus 203K) will cross the wires at 8:15 ET. Q2 Productivity and Unit Labor Cost data will follow at 8:30 ET while the Factory Orders report for July (Briefing.com consensus 0.9%) will be reported at 10:00 ET. The day's data will be topped off with the 14:00 ET release of the Federal Reserve's September Beige Book.
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