Markets Fall In China & Japan, U.S. Indices Could Follow - Markets This Morning

  • Stocks crashed at the open, almost got back the loss, then crashed again at the close.
  • The average share lost nearly 4%.
  • The fall in Chinese markets could be the trigger for weakness today.

Stock Markets See Yet Another Crash - S&P 500 loses 3.94%

Markets Fall In China & Japan, U.S. Indices Could Follow - Markets This Morning

Stocks crashed at the open, the Dow falling 1,000 points within five minutes. Then they recovered, quickly then more slowly, and all looked well as we went to lunch. Then the selling accelerated in the last hour and the closing numbers were all red, red, red. For the day the Dow was off 3.58% or 588.47 to finish at 15,871, the S&P 500 was down 3.94% of 77.67 to finish at 1,893, and the NASDAQ was down 3.82% or 179.79 to finish at 4,526. There was no snap-back rally in the markets as many had expected, following what was the worst week in 4 years from stock markets.

China’s collapse got most of the blame, with the Shanghai index losing 8.5%, the Nikkei 4.61%, the Hang Seng 5.17% and India’s Sensex losing 5.84%. The red ink then went to Europe, where Germany’s DAX was down 4.7%, England’s FTSE was down 4.76% and the French CAC-40 was down 5.35%.

Seen from that perspective Wall Street didn’t do that bad. Especially since about 15% of the U.S. market represents energy stocks, and West Texas Intermediate crude finished at $37.93, Brent North Sea crude finished at $42.38 and natural gas finished at 2.67/mcf

Tech Tries to Come Back

Tech stocks led the comeback during the morning. Apple (NASDAQ:AAPL) CEO Tim Cook tried to calm markets in the morning with an e-mail saying his company continues to do well in China, and for a few hours his stock was actually in the green, but it finally finished at about $104, down 1.68% on the day. (It was even as late as 3:15 PM.) Netflix (NASDAQ:NFLX) was up around noon but wound up losing $6.72 to finish at $97.24. Facebook (NASDAQ:FB) was higher for a few minutes at lunch time but finished down $3.47 to finish at $82.58.

Biotechs had the same kind of day. Celgene (NASDAQ:CELG) was even at lunch but down $4.41 at the close to finish at $114.64. Regeneron (NASDAQ:REGN) had the same kind of action but wound up down $18.40 to finish at $508.78. Allergan (NYSE:AGN) lost $6.32 to finish $292.25.

The Empire of Oil Capitulates

If you went to bed with oil stocks in your portfolio you woke up a lot poorer. Exxon Mobil (NYSE:XOM) finished down $3.42 at $68.71. Pioneer Resources (NYSE:PXD) lost $7.81 and finished at $113.13. EOG Resources (NYSE:EOG)  finished down $5.54 and finished at $69.32. In none of these cases did the morning fightback draw them anywhere close to break-even. It was sell, sell sand sell all day.

Stock experts who formerly talked of bottom fishing in the oils were no longer saying that yesterday, which may be the only bullish signal in the oil market.

What Now, China?

All day long yesterday traders were comparing the present correction to those that have gone before, noting that even the 1987 crash did not portend economic trouble, and that the 1997 “Asian contagion” turned out to be relatively easy to contain. The one year no one wanted to mention was 2008, when markets fell apart. No one expects that to happen this time.

Today’s market will be heavily influenced by what happened in China. As trading closed yesterday, there were rumors that the Chinese central bank might make lending easier. Other traders were thinking that the government’s best move there might be to let this contagion run its course.

Whatever happens there, U.S. traders will take their cues from it, and today's 7.6% fall in China points to more weakness ahead.

Cover image licensed from - Copyright: jjvallee / 123RF Stock Photo

Check our daily stock market news section - Markets This Morning, for a quick round-up of key news and events before the bell.

Dana Blankenhorn Dana Blankenhorn   on Amigobulls :

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