Tag Archives: Stock Market

Market Continues Roller Coaster Ride

The Market hit a flat track today as U.S. stocks rebounded a bit after the Dow plunged more than 200 points in the late afternoon on Wednesday.  The Dow Jones industrial average ended up 77 points, or 0.5%, after initially bouncing in and out of positive territory.

This roller coaster has put investors in a jumpy frame of mind while most braced for next week’s Federal Reserve meeting on interest rates.  

The Dow, which typically moves about 150 points between peak and tough throughout the trading day, has experienced average daily swings of more than 400 points since August 19.

The market ride was punctuated by the Dow’s 1,000-point nosedive on August 24, its largest one day point decline on record.

Chinese Government Rapidly Using Foreign Currency to Prop Up Economy

The Chinese government has quietly been depleting their reserves of foreign currency in an attempt to prop up their stock markets and overall economy.

Government data released Monday showed the government used just under $100 billion in the last month, a record amount.  China still has $3.56 trillion in foreign currency at their disposal.

“[The outflows of capital] are unprecedented and have no comparison to any period in the past,” Nikolaos Panigirtzoglou, global market strategist at J.P. Morgan in London, told the Wall Street Journal. “There could potentially be even more over the coming year, as the market tries to gauge the extent of the devaluation of the Chinese currency.”

Many analysts say the use of the currency was inevitable after the central bank devalued the country’s currency twice in two days this month.

“Frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity,” said Zhou Hao, senior economist at Commerzbank in Singapore, to Reuters.

The news of the government’s spending of foreign currency comes as the stock market took another significant fall Monday.  The Shanghai market closed down 2.5 percent in what traders there termed a “volatile day.”

The drop comes as China’s Central Bank Governor Zhou Xiaochuan told a meeting of economic leaders of the world’s top 20 economies that the Chinese market correction was almost over.  Chinese equity markets have fallen 40 percent since June.

International Monetary Fund Raising Alert over China Slowdowns

International Monetary Fund (IMF) leaders are warning the world to prepare for a massive slowdown in the Chinese economy.

“As the Chinese economy is adjusting to a new growth model, growth is slowing — but not sharply, and not unexpectedly,” Christine Lagarde, managing director of the International Monetary Fund, said Tuesday in Indonesia, according to prepared remarks. “Other emerging economies, including Indonesia, need to be vigilant to handle potential spillovers from China’s slowdown and tightening of global financial conditions.”

The trouble with the Chinese stock market and manufacturing slowdowns has impacted more than just the major U.S. stock markets.  Oil prices have tumbled; commodities markets such as copper have also been falling significantly because of the downturn in production.

Asia has been predicted by the IMF at the start of the year to drive world economies but they are now backing off from that position.  They are calling for “moderate” growth while admitting the growth “pace is turning out slower than expected.”

The U.S. says they’re watching to make sure the Chinese government is not attempting to manipulate their currency or stock market in an attempt to maintain a global economic leadership position.

“We are going to hold them accountable,” Treasury Secretary Jacob Lew told CNBC.

Markets Begin September in Nose Dive

The stock markets ended one of the worst months in three years by starting September in a nose dive.

The Dow Jones Industrial Average fell almost 470 points and ended at 16,058.  The drop of just over 2.8% was the single worst opening day for a month in the market since March 2009.  The Dow has fallen 12.5% from the all-time high in May.

The Standard & Poor’s 500 also had their worst first day of trading since March 2009, falling almost 3 percent to 1,913.  Only three stocks in the index showed gains on the day:  Cablevision, American Airlines and a chemical company, Sigma-Aldrich.

The NASDAQ had its worst opening day of a month trading since October 2011.  It’s now 2% lower for the year.

Most analysts attributed the stock fall to continuing fears about the Chinese economy and volatility in the Chinese stock market.  Two major reports from China today showed significant slowing in the country’s manufacturing.

Many of the American stocks that took heavy hits in today’s trading have strong connections to China such as Apple and Qualcomm.

However, the U.S. gauge for manufacturing also turned in a dismal result Tuesday.  The ISM manufacturing index fell to its lowest level since May 2013.

Chinese Government Suspected of Stock Market Manipulation

After two days of massive losses that triggered worldwide economic downturns, the rally of the Chinese stock market is leading investors and analysts to suspect government manipulation of the market.

The Shanghai Composite Index has been in free-fall over the last three months.  The index fell 11.8% in August.  A five-session selloff drove the Chinese market so low that markets around the world tumbled in response.

Then suddenly Thursday, the Chinese market jumped 5%.

And again Friday.

Investors began to suspect government intervention in the market, with the government quietly buying up stocks with newly printed money from the Chinese Central Bank.  The Chinese government is promoting a big celebration for the 70th anniversary of World War II next week and analysts believe they wanted investors in a good mood ahead of the events.

The market is closed September 3-4 for a national holiday.

“If the government sustains buying there are terribly negative consequences, such as impact to [People’s Bank of China’s] credibility and yuan credibility…Any bank can create money out of thin air, which is why confidence is so important,” David Cui, a strategist for Bank of America Merrill Lynch, told Marketwatch. “So if they keep printing money to buy high valued stocks, it will damage yuan credibility.”

“What’s happening is an act of desperation by China and it starts dragging down other countries with it,” said Bill Stoops, chief investment officer with Dragon Capital, told the L.A. Times. ”China’s police state economic model is falling apart.”

Dow Snaps Losing Streak with Large Gain

The Dow Jones Industrial Average (DJIA) snapped a six day streak of major losses with a huge gain in Wednesday, finishing more than 600 points higher than Tuesday’s close.

The index ended the day at 16,285.51, up 619.07 points or an increase of 3.96%.  The Standard & Poor’s 500 was 3.9% higher at 1,940.51 (up 72.90 points) and the NASDAQ was up 191.05 points, or 4.24%, to finish at 4,697.54.

The market actions also caused the policymaker for the federal reserve, William Dudley, to quietly backtrack on indications that an interest rate increase would be coming in September.  Dudley now is implying the rate is likely to increase in October.

The markets around the world were mixed, with Europe down Wednesday after increasing on Tuesday and China’s Shanghai exchange finishing 1.3% lower on a day of erratic trading.

Analysts are trying to play up what they call good economic news for the U.S. as an indicator a Chinese downturn will not impact the overall economy.  The Commerce Department announced orders for durable goods increased 2% in July and that consumer confidence and new home sales were also up during the month.

“People need to see that the U.S. economy is still okay and that China is not going to fall apart,” said Keith Lerner, chief market strategist for SunTrust, told the Washington Post.

The market losses have been crushing to most Americans who have invested in stocks.  Collectively, over $2.1 trillion in value was lost during the six day market decline, and it brought the largest selloff in 75 years.

The Economic Collapse Blog: BLACK MONDAY: The First Time EVER The Dow Has Dropped By More Than 500 Points On Two Consecutive Days

On Monday, the Dow Jones Industrial Average plummeted 588 points. It was the 8th worst single day stock market crash in U.S. history, and it was the first time that the Dow has ever fallen by more than 500 points on two consecutive days. But the amazing thing is that the Dow actually performed better than almost every other major global stock market on Monday.  In the U.S., the S&P 500 and the Nasdaq both did worse than the Dow. In Europe, almost every major index performed significantly worse than the Dow.  Over in Asia, Japanese stocks were down 895 points, and Chinese stocks experienced the biggest decline of all (a whopping 8.46 percent). On June 25th, I was not kidding around when I issued a “red alert” for the last six months of 2015. I had never issued a formal alert for any other period of time, and I specifically stated that “a major financial collapse is imminent“. But you know what? As the weeks and months roll along, things will eventually be even worse than what any of the experts (including myself) have been projecting. The global financial system is now unraveling, and you better pack a lunch because this is going to be one very long horror show.

Our world has not seen a day quite like Monday in a very, very long time. Let’s start our discussion where the carnage began…

The Economic Collapse Blog – The Economic Collapse Blog: BLACK MONDAY: The First Time EVER The Dow Has Dropped By More Than 500 Points On Two Consecutive Days

CNNMoney: Trading was halted 1,200 times Monday

The selling on Wall Street was so dramatic Monday that it triggered unprecedented emergency freezes on stocks.

Stocks and exchange-traded funds were automatically halted more than 1,200 times, according to Nasdaq.

The high level of trading pauses highlights just how extreme the selloff was in a short span of time. Fears about China’s economic slowdown caused the Dow to plummet over 1,000 points when the market opened. The Dow ended down 588 points, its worst decline since August 2011.

CNNMoney – CNNMoney: Trading was halted 1,200 times Monday

MarketWatch: Households just saw $1.8 trillion in wealth vanish as stocks fall

You may have seen headlines to describe the market carnage like a trillion dollar’s worth of wealth wiped away in a single day. But it’s worth noting just how much is held by Americans in the stock market in the first place.

MarketWatch took a look at the Federal Reserve’s financial accounts of the United States report for answers — and did some back-of-the-envelope math.

As of March 31, households and nonprofits held $24.1 trillion in stocks. That’s both directly, and through mutual funds, pension funds and the like. That also includes the holdings of U.S.-based hedge funds, though you’d have to think that most hedge funds are held by households.

MarketWatch – MarketWatch: Households just saw $1.8 trillion in wealth vanish as stocks fall

Wall Street Ends the Day Down Despite Early Gains

Investors were hopeful on Tuesday as U.S. stock seemed to have early gains, but those gains were reversed and U.S. stocks ended down within the final 30 minutes of trade.

Trading on Wall Street was voluminous . S&P 500 was down 1.4% even after a late selloff that gained them 2.9% earlier today.

The day ended with the Dow Jones industrial average falling 204.91 points, or 1.29%, to 15,666.44.  The NASDAQ Composite lost 19.77 points and S&P 500 was down 25.59 points, it’s biggest loss since 2011.

“You saw a knee-jerk drop and a knee-jerk recovery and now people are thinking about it,” said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Mass.

The Chinese central bank cut interest rates by 0.25%, making the one-year lending rate 4.6%. The reason was “aimed at lowering corporate borrowing costs and to ensure enough liquidity for stable credit growth.”

“I think it’s a real good start, but it’s on the low end of what the markets were looking for. It indicates China has stepped off the idea that markets will go it alone, and instead the government will support them. It’s not a question about how much assistance there is, now that they’ve made the commitment, it will be enough [to quell market sentiment],” McMillan stated.

Despite these efforts to boost China’s equity markets, the Shanghai Composite lost 7.63% and Japan’s Nikkei fell 3.96%.

The price of oil barely rose, but the slowdown in China kept prices from rising significantly. The price of copper rose 2.3%, but the values of both gold and silver fell.