The stock markets in the United States extended its losses today due to the continued concerns among investors regarding the slowing Chinese economy, which could spill over globally.
The equity markets were also negatively impacted by the selloff of shares in the commodity and biotechnology industries, and the mixed economic data.
Last year was a banner year for hedge funds in general, as the industry attracted $31 billion worth of net inflows, according to data from HFM. That total included a challenging fourth quarter, in which investors pulled more than $23 billion from hedge funds. HFM reported $12 billion in inflows for the first quarter following Read More
In an interview with Bloomberg, James Gaul, a portfolio manager at Boston Advisors commented, “We are in a chaotic market, lots of volatility but not making much progress in either direction. Earnings are going to be really important this quarter considering the macro backdrop and general global fears as well as the concerns about the Fed potentially raising interest rates as early as next month.”
Data today showed that Chinese industrial companies experienced the biggest profit drop since 2011. China’s industrial profits declined 8.8% in August from the period last year.
Some of the export-oriented enterprises in China suffered from foreign-exchange losses due to the devaluation of the yuan currency last month, according to the National Bureau of Statistics. The agency also noted that the volatility of the China’s stock market contributed to the decline of industrial profits.
Separately, the U.S. Department of Commerce reported that consumer spending increased 0.4% while personal income climbed 0.3% last month.
Meanwhile, the contract signings to buy previously owned homes dropped in August, an indication that residential real estate market may be struggling to maintain its recent momentum.
Matt Maley, an equity strategist at Miller Tabak & Co LLC, said, “Supposedly Yellen had clarified everything on Thursday, and yet the market still went down. It shows me that there are issues other than the Fed causing this decline.”
- Dow Jones Industrial Average (DJIA) – 16, 005.27 (-3.05%)
- S&P 500- 1,881.94 (-2.56%)
- NASDAQ- 4,543.67 (-3.05%)
- Russell 2000- 1,093.61 (-2.60%)
- EURO STOXX 50 Price EUR- 3,039.44 (-2.37%)
- FTSE 100 Index- 5,958.86 (-2.46%)
- Deutsche Borse AG German Stock Index DAX- 9,483.55 (-2.12%)
- Nikkei 225- 17,645.11 (-1.32%)
- Hong Kong Hang Seng Index- 21,186.32 (+0.43%)
- Shanghai Shenzhen CSI 300 Index- 3,242.75 (+0.33%)
Stocks in Focus
The stock price of Valeant Pharmaceuticals declined more than 16% to $166.50 per share. The Congressional Democrats on the House Committee on Oversight and Government Reform asked Republican committee chairman Jason Chafeets to subpoena the pharmaceutical company for documents related to its drug price increases.
Williams Companies plummeted more than 12% to $35.56 per share. The company agreed to be acquired by Energy Transfer Equity for approximately $37.7 billion.
Freeport-McMoRan declined 9% to $8.91 per share. The company’s stock price has been negatively impacted since the Federal Reserve stated that it was considering spillover risks from the recent global financial market turmoil to the U.S. economy. The company lost more than 55% of the stock value over the past three months.