U.S. stocks slid for a third straight day as the deepening selloff in
emerging-market stocks fanned concerns over slowing global growth.
The Standard & Poor’s 500 fell 1.1 percent to 2,056.64 at 10:07 a.m. in New York, dropping below its average price for the past 200 days and erasing its gain for the year. The Dow Jones Industrial Average lost 212.92 points, or 1.2 percent, to 17,135.81.
The rout in emerging markets intensified as Kazakhstan abandoned its currency trading peg, joining Vietnam after China’s devaluation. Currency weakness and a slowdown in Chinese growth prompted Citigroup Inc. to cut its 2016 global growth forecast to 3.1 percent from 3.3 percent, its third consecutive downgrade, while holding its 2015 estimate at 2.7 percent.
“There is a continuous negative news flow coming from China and Asia, commodity prices are declining; this all contributes to pessimism about the health of the global economy,” said Steven Santos, a broker at Banco de Investimento Global SA in Lisbon. “This negative momentum will continue to weigh on U.S. equities.”
Investor anxiety over deteriorating overseas markets is increasing as the Federal Reserve considers the timing of its first interest rate increase since 2006. Slower global economic growth may cause the central bank to delay raising rates as minutes released yesterday showed officials are concerned about stubbornly low inflation even as the job market improves.
Traders are now pricing in a 36 percent probability of a rate move at the September meeting, down from 50 percent before the release of the minutes.
Other reports showed purchases of previously owned U.S. homes unexpectedly rose last month to the highest level since February 2007, consistent with further strength in the housing market. Jobless claims increased by 4,000 to 277,000 in the latest week. Applications have been lower than 300,000, a level typically associated with an improving job market, since early March.
The benchmark measure is stuck in the tightest trading range since 1927, down 3.5 percent from a record reached in May.
Gap Inc., Salesforce.com Inc, and Hewlett-Packard Co. are among five companies posting results today. As the earnings season winds down, about 74 percent of the S&P 500 members that have reported so far beat profit estimates, while 49 percent topped sales projections. Analysts now expect a 2.1 percent drop in second-quarter earnings.
All 10 major groups in the S&P 500 retreated, with financial companies dropping 1.5 percent. Technology and consumer-discretionary shares slid more than 1.2 percent.
Walt Disney Co. fell 4.3 percent to the lowest since February after Sanford C. Bernstein & Co. downgraded the entertainment company to market perform from outperform.
Tesla Motors Inc. retreated 1 percent after the electric-car company said the underwriters of its secondary stock sale exercised their option for additional shares. The shares were sold at a discount.
NetApp Inc. jumped 3.6 percent after issuing a quarterly revenue forecast that exceeded analysts’ estimates, as stronger demand for data-storage services drives higher sales.
The Standard & Poor’s 500 fell 1.1 percent to 2,056.64 at 10:07 a.m. in New York, dropping below its average price for the past 200 days and erasing its gain for the year. The Dow Jones Industrial Average lost 212.92 points, or 1.2 percent, to 17,135.81.
The rout in emerging markets intensified as Kazakhstan abandoned its currency trading peg, joining Vietnam after China’s devaluation. Currency weakness and a slowdown in Chinese growth prompted Citigroup Inc. to cut its 2016 global growth forecast to 3.1 percent from 3.3 percent, its third consecutive downgrade, while holding its 2015 estimate at 2.7 percent.
“There is a continuous negative news flow coming from China and Asia, commodity prices are declining; this all contributes to pessimism about the health of the global economy,” said Steven Santos, a broker at Banco de Investimento Global SA in Lisbon. “This negative momentum will continue to weigh on U.S. equities.”
Investor anxiety over deteriorating overseas markets is increasing as the Federal Reserve considers the timing of its first interest rate increase since 2006. Slower global economic growth may cause the central bank to delay raising rates as minutes released yesterday showed officials are concerned about stubbornly low inflation even as the job market improves.
Traders are now pricing in a 36 percent probability of a rate move at the September meeting, down from 50 percent before the release of the minutes.
Economic Data
Investors also weighed a mixed batch of economic reports today. The Conference Board’s index of U.S. leading economic indicators, a measure of the outlook for the next three to six months, decreased 0.2 percent in July.Other reports showed purchases of previously owned U.S. homes unexpectedly rose last month to the highest level since February 2007, consistent with further strength in the housing market. Jobless claims increased by 4,000 to 277,000 in the latest week. Applications have been lower than 300,000, a level typically associated with an improving job market, since early March.
The benchmark measure is stuck in the tightest trading range since 1927, down 3.5 percent from a record reached in May.
Gap Inc., Salesforce.com Inc, and Hewlett-Packard Co. are among five companies posting results today. As the earnings season winds down, about 74 percent of the S&P 500 members that have reported so far beat profit estimates, while 49 percent topped sales projections. Analysts now expect a 2.1 percent drop in second-quarter earnings.
All 10 major groups in the S&P 500 retreated, with financial companies dropping 1.5 percent. Technology and consumer-discretionary shares slid more than 1.2 percent.
Walt Disney Co. fell 4.3 percent to the lowest since February after Sanford C. Bernstein & Co. downgraded the entertainment company to market perform from outperform.
Tesla Motors Inc. retreated 1 percent after the electric-car company said the underwriters of its secondary stock sale exercised their option for additional shares. The shares were sold at a discount.
NetApp Inc. jumped 3.6 percent after issuing a quarterly revenue forecast that exceeded analysts’ estimates, as stronger demand for data-storage services drives higher sales.
