The stock markets in the United States dropped as investors evaluate the global economic situation and the potential decision of the Federal Reserve regarding interest rate increases.

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In a telephone interview with Bloomberg, Stephen Carl, principal and head equity traded at Williams Capital Group said, “Investors are in wait-and-see-mode, waiting to figure which way the market is going to head. The technical guys are focusing on moving averages.”

Last week, global equities lost $1.53 trillion in value amid growing concerns regarding the global economic slowdown. Today, Charles Evan, president of the Federal Reserve Bank in Chicago reiterated his concern regarding slow inflation growth in the United States. He emphasized that policy makers need to “exceptionally patient” in adjusting monetary policy.

The Federal Reserve recently stated a potential delay in the implementation of interest rate increases due to weakness of the global economy. The International Monetary Fund (IMF) reduced its 2015 global growth outlook to 3.8% and warned that the European region is at risk of facing a recession. European Central Bank (ECB) President Mario Draghi emphasized that policy makers in the region must lift the inflation from an excessively low level.

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Investors are also monitoring the financial results of corporations as the third-quarter earnings season already started last week. Walter Todd, chief investment officer at Greenwood Capital Associates said, “Some of the moves we saw last week in individual names were breathtaking in terms of volatility.  I’d definitely like to see it stabilize a little bit. The catalyst for moving higher will be earnings that aren’t necessarily good, but just not as bad as people are expecting.”

U.S. Markets

  • Dow Jones Industrial Average (DJIA)- 16,321.13 (-1.35%)
  • S&P 500- 1,874.76 (-1.65%)
  • NASDAQ- 4,213.66 (-1.46%)
  • Russell 2000- 1,049.41 (-0.37%)

European Markets

  • EURO STOXX 50 Price EUR- 2,998.32 (+0.23%)
  • FTSE 100 Index- 6,366.24 (+0.41%)
  • Deutsche Borse AG German Stock Index DAX- 8,812.43 (+2.27%)

Asia-Pacific Markets

  • Nikkei 225- 15,300.55 (-1.15%)
  • Hong Kong Hang Seng Index- 24,143.38 (+0.24%)
  • Shanghai Shenzhen CSI 300 Index- 2,454.95 (-0.48%)

Stocks in Focus

The stock price of CSX Corporation (NYSE:CSX) rose nearly 6% to $31.71 per share driven by the report that Canadian Pacific Railway Limited (TSE:CP) (NYSE:CP) attempted to initiate a merger discussion over the past week. People familiar with the matter said CSX rejected Canadian Pacific’s merger proposal.

The shares of Canadian Pacific Railway Limited (TSE:CP) (NYSE:CP) declined more than 2% to $184.97 per share in New York.  Bill Ackman’s Pershing Square Capital Management is the second-largest shareholder of the Canadian railroad operator.

GoPro Inc (NASDAQ:GPRO) declined almost 10% to $76.67 per share after its camera was implicated in a high-profile ski accident involving Formula One driver Michael Schumacher.

Tesla Motors Inc (NASDAQ:TSLA) fell more than 5% to $224.59 per share after Credit Suisse analysts Daniel Galves reduced his 2014 earnings estimate for the company from $0.96 to $0.86 per share to reflect that drive unit related warranty charge in the third quarter.  Credit Suisse has an Outperform rating and $325 price target for the shares of Tesla.

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