The Dow Jones Industrial Average fell nearly 400 points Thursday as steep falls in Chinese equities spilled over to global markets
Thursday’s selloff came after the People’s Bank of China made its largest downward adjustment to the yuan since August. The country’s stock market fell more than 7% amid concerns about capital flight from the Asian giant, and China’s stock markets stopped trading after only 30 minutes, ending the shortest trading day in their history after the newly installed mechanism to limit volatility was triggered for the second time this week.
The Dow industrials dropped 392.41 points, or 2.3%, to 16514.10. The S&P 500 dropped 2.4%. Both indexes are off to their worst starts ever, with the Dow down 5.2% over the first four trading days of the year and the S&P 500 off 4.9%.
The Nasdaq Composite, which declined 3% on Thursday, is having its worst start since 2000, down 6.4%.
Traders said while they prepared for a frenzied trading session there was relatively little urgency in the selling.
“U.S. markets are getting wrapped in with global markets, and rightfully so, but so far there isn’t massive panic selling here,” said Jonathan Corpina, senior managing partner at Meridian Equity Partners.
Stock market declines worsened in afternoon trading as investors braced for another potential drop in Chinese stock markets on Friday. Traders said many investors made late-day bets against the S&P 500 in case there is additional turmoil in China on Friday that again spills over to U.S. markets.
Markets around the globe fell on Thursday. Japan’s Nikkei Stock Average, Australia’s S&P/ASX 200 and Hong Kong’s Hang Seng Index each lost more than 2%.
The Stoxx Europe 600 fell 2.2% after earlier declining as much as 3.6%.
SOURCE: CORRIE DRIEBUSCH and RIVA GOLD
Wall Street Journal