The stock markets in the United States ended the trading session down due to the weakness of equities of biotechnology companies and raw-materials producers. Investors perceive new signs that China’s economy is slowing.
Jim Paulsen, chief investment strategist at Wells Capital Management, told Bloomberg that the market is negatively impacted by the “ongoing collapse in commodity prices emanating from weak data in China.”
He added that companies such as Caterpillar were reporting weak earnings because of China, are weighing on the market.
China’s manufacturing declined to the lowest level in 15 months, according to the preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics. The index fell from 49.4% to 48.2% in July. Economists polled by Bloomberg expected an increase to 49.7%.
Everbright Securities chief economist Xu Gao said he does not yet see any sign of stabilization in the industrial sector. According to him, the Chinese government should boost further its policy supports by increasing its infrastructure investments and accelerating the debt swap program.
Meanwhile, the U.S. Department of Commerce reported that the sales of new homes declined by 6.8% to 482,000 units in June, the weakest since November.
Ward McCarthy, chief financial economist at Jefferies commented, “There’s no question the housing sector kicked into a higher gear in the second quarter, but this might be a dose of reality that the acceleration is not as sharp as it had looked.”
McCarthy still sees a positive outlook for the housing market because of more jobs, rising household formation and good affordability levels.
- Dow Jones Industrial Average (DJIA) – 17,568.53 (-0.92%)
- S&P 500- 2,079.65 (-1.07%)
- NASDAQ- 5,088.63 (-1.12 %)
- Russell 2000- 1,266.16 (-1.51%)
- EURO STOXX 50 Price EUR- 3,600.00 (-0.95%)
- FTSE 100 Index- 6,679.81 (-1.13%)
- Deutsche Borse AG German Stock Index DAX- 11,347.45 (-1.43%)
- Nikkei 225- 20,544.53 (-0.67%)
- Hong Kong Hang Seng Index- 25,128.51 (-1.06%)
- Shanghai Shenzhen CSI 300 Index- 4,176.28 (-1.75%)
Stocks in Focus
The stock price of Amazon.com surged almost 10% to $529.42 per share after reporting strong financial results for the second quarter. The e-commerce giant reported a surprising profit of $92 million or $0.19 per share in $23.18 billion in revenue.
Biogen declined 22% to $300 per share. The company reported non-GAAP earnings of $4.22 per share and $2.6 billion in revenue for the second quarter. The company’s earnings increased 21%, and revenue rose 7%. However, Biogen’s stock price was negatively impacted by reduced financial guidance for 2015.
The stock value of Vital Therapies dropped nearly 20% to $13.74 per share.The Law Offices of Howard G. Smith is investigating the company on behalf of shareholders regarding potential violations of federal securities laws.