Dow Jones Plummets 1,000 Points
( 4UMF NEWS ) Dow Jones Plummets 1,000 Points:
*** BREAKING NEWS ***
Wall Street is bracing for another "big break" in the U.S. stock market in early trading Monday after last week's worst rout in four years, as the Dow Jones industrial average is down more than 1,000 points in pre-market trading and the broad Standard & Poor's 500-stock index is off more than 3%, a drop that would put the broad U.S. stock market in correction territory.
Market anxiety is on the rise after a big sell-off in China overnight, where the Shanghai composite index shed 8.5%, its biggest one-day decline since 2007 -- and Chinese media were dubbing the selloff "Black Monday." The global stock rout then moved to Europe where major indexes there are off roughly 5%.
"Bad break," is the way Edward Yardeni, chief investment strategist at Yardeni Research, described the global tumult in stock markets around the globe.
"It's a really cruel summer," Savita Subramanian, equity and quant strategist at Bank of America Merrill Lynch told clients in a report before the opening bell. "Call it de-risking, a flight to quality, a momentum meltdown, or the first signs of a global recession," but the fact is the past week saw the first pullback of greater than 5% since last October and the worst week since September 2011, she added.
And the market pain looks set to continue to kick off the week. An hour before the opening bell on Wall Street, the Dow was off 630 points, or 3.9% and the S&P 500 was down 3.5%.
The massive selloff, which kicked into high gear last week when the Dow tumbled more than 1,000 points and sank into official correction territory, defined as a drop of 10% or more. Wall Street is still trying to gauge what will stop the landslide and stabilize the battered market, how bad the ultimate decline will be and when it's safe to dive back into the market and seek out battered stocks.
The selloff has been driven by growing fears that China's economy, the world's second-biggest and once the engine of world growth, is slowing more than many investors had thought, raising fears that a global economic relapse will ensue, hurting corporate profits for companies in the U.S. and the rest of the globe.
If trading in the futures markets is any indication of how they day will go, it looks like it will be another very rough day on Wall Street, a day that will likely push the S&P 500 and Nasdaq composite into correction territory as well.
Heading into today's trading session, the broad S&P 500 was 7.5% below its May 21 record closing high of 2,130.82. The large-cap stock index would have to drop below 1917.74 to hit correction territory.
The Nasdaq heads into the new week 9.8% off its record close of 5218.86, so will sink into correction territory when the market opens,
Yardeni sums up the big question facing investors: "Is the latest panic attack likely to be followed by yet another relief rally, or was last week's stock market rout the beginning of a bear market (or a drop of 20% or more)?"
The small-company Russell 2000 also dipped into correction territory along with the Dow last week, and enters today's action down 10.7% from its June 23 peak.
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