Keep the seatbelts on!
After weak factory data reawakened worries over China's sputtering economy, stocks considerably dropped last Tuesday as reported in CNBC.com. In particular, energy stocks plummeted really hard, which fuelled 'a broad-based selloff on Wall Street that has all 10 sectors of the S&P 500 deep in the red,' according to a report in Nasdaq. Again falling into correction mode, Dow Jones Industrial Average declined by 350 points. The main index in Shanghai fell to 3% in early trading Wednesday according to The New York Times. Foreign investors are now becoming more and more anxious about the strength of the global economy.
In an article on CNBC.com, Ryan Larson, head of equity trading at RBC Global Asset Management (U.S.), expressed his thoughts on the situation: "Today is just a continuation of last night's sentiment, plain and simple. Concerns continue to erupt about China's economy and the growth (as well as the) decline in energy and WTI today."
David Kelly, chief global strategist at J.P. Morgan Funds, also expressed his sentiments on the matter: "I think that is clearly the center of the weakness but I don't know why people expect China to get any better. China has its problems but it's not a big driver for the U.S. or earnings of U.S. corporations." Kelly added that "Nothing happened yesterday to affect the people's perceptions of the Fed."
As reported on CNBC.com. some prominent analysts attributed 'the volatility to a hawkish read on Fed Vice Chair Stanley Fischer's comments over the weekend ahead of Friday's key jobs report and the FOMC meeting later this month'.
The chief investment officer at Oppenheimer Funds, Krishna Memani said, "The markets were counting on him (Stanley Fischer) to be more dovish and he wasn't. That in conjunction with the weak PMI (in China) pressured stocks."
According to a CNBC report, traders were definitely disappointed on Tuesday after knowing the 2 sets of crucial Chinese data: 'the official manufacturing purchasing managers' index that edged down to 49.7 in August from 50 in July, and the final Caixin/Markit manufacturing PMI came in at 47.3 in August, which is deemed as the lowest reading since March 2009.'
