The stock markets in the United States declined primarily due to additional signs of a slowdown of the Chinese economy, which negatively impacted companies in the raw materials and industrial sectors.

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Today, data showed that China’s manufacturing industry contracted at its fastest pace in September. The Caixin’s Purchasing Managers’s Index (PMI) preliminary figure was 47.0, the seventh consecutive month of contraction since March 2009. A result below 50 means the manufacturing sector is weakening.

Caixin Insight Group chief economist, He Fan said the China’s manufacturing industry “reached a crucial stage in the structural transformation process.” He added that the weakness was primarily caused by the sluggish demand for Chinese products and lower export prices.

Sean Shepley, head of global macro product strategy at Credit Suisse, told the Wall Street Journal that China’s slowdown was “not an enormous surprise.”

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Meanwhile, European Central Bank (ECB) President Mario Draghi told Parliament lawmakers that it is too soon to make a decision whether the risks to the economic outlook require additional stimulus. He emphasized that the ECB is ready to act if the risks increase.

“More time is needed to determine in particular whether the loss of growth momentum in emerging markets is of a temporary or permanent nature and to assess the driving forces behind the drop in the international price of commodities and behind the recent episodes of severe financial turbulence,” said Draghi.

Last week, Federal Reserve Chairperson Janet Yellen said policymakers would evaluate the risks associated with the slowing economic growth in China and other emerging markets.

Market observers have divided opinions regarding the possibility for the Federal Reserve to raise interest rates this year. Around 41% of traders believe an interest rate hike will happen in December while 50% think it will be in January.

In an interview with Bloomberg, Matt Maley, an equity strategist at Miller Tabak & Co noted that Yellen will deliver a speech tomorrow, and “people are hoping that she’ll make some further comments that will take away some of the confusion and uncertainty that her comments from last week made.”

U.S. Markets

  • Dow Jones Industrial Average (DJIA) – 16, 279.89 (0.31%)
  • S&P 500- 1,938.76 (-0.20%)
  • NASDAQ- 4,752.74 (-0.08%)
  • Russell 2000- 1,140.79 (-0.20%)

European Markets

  • EURO STOXX 50 Price EUR- 3,079.99 (+3.94%)
  • FTSE 100 Index- 6,032.24 (+1.62%)
  • Deutsche Borse AG German Stock Index DAX- 9,612.62 (+0.44%)

Asia-Pacific Markets

  • Nikkei 225- 18,070.21 (-1.96%)
  • Hong Kong Hang Seng Index- 21,302.91 (-2.26%)
  • Shanghai Shenzhen CSI 300 Index- 3,263.03 (-2.28%)

Stocks in Focus

Applied Materials announced its offering of senior unsecured notes with an aggregate principal amount of $1.8 billion. The company aims to use the net proceeds from the offering to redeem or repay its $400 million 2.65% notes due on June 15, 2016. The stock price of Applied Materials dropped more than 3% to $14.60 per share today.

The stock price of Sunedison declined more than 10% to $9.31 per share. BermanD De Valerio, a law firm issued a statement indicating its intention to investigate the joint acquisition deals of Sunedison and Terraform Power. The law firm wants to find out whether Sunedison took undue advantage of its position in TerraForm Power.

First Niagara Financial Group surged more than 14% to $10.26 per share. The bank holding company benefited from reports that it engaged the services of JP Morgan regarding a potential sale.

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