Dow Recovers From 1,000-Point Drop as Buyers See Opportunity
New York (Aug 24) US equities moved off of session lows by mid-morning Monday, though remained sharply lower, as opportunists saw a chance to buy after days of declines.
The S&P 500 was down 2.2%, recovering from a drop of more than 5% earlier. The benchmark index moved out of correction territory, though remained down 9.5% from its May record.
The Dow Jones Industrial Average was down 1,089 points at its session low, a bigger one-day point decline than any seen in the financial crisis i 2008. The Dow was down 2% or 330 points by mid-morning.
The Nasdaq slid 2.2% as high-momentum tech stocks were the hardest hit. Apple (AAPL - Get Report) fell 1%, Alibaba (BABA) slid 3.6%, Twitter (TWTR - Get Report) tripped 3.1%, Google (GOOGL - Get Report) slipped 1.4%, and Amazon (AMZN - Get Report) fell 3.8%. The Technology SPDR ETF (XLK) tumbled 3.1%.
China's Shanghai Composite plummeted 8.5% overnight in what has been dubbed 'Black Monday.' The drop was its biggest one-day percentage decline since early 2007, pushing the index into negative territory for 2015. The index crumbled more than 10% last week after manufacturing data reinforced fears the world's second-largest economy was undergoing a significant slowdown.
Casino stocks with exposure to Asian gambling destination Macau were sharply lower. Melco Crown Entertainment (MPEL) slid 3.8%, Las Vegas Sands (LVS) fell 2%, Wynn Resorts (WYNN) was down 2%, and MGM Resorts (MGM) tumbled 4.6%.
World markets fell in-step with China's stock market. European markets such as Germany's DAX, France's CAC 40, and the FTSE 100 in London plummeted more than 4%, while Japan's Nikkei fell 4.6% and the Hang Seng slid 5.2%.
Crude oil plummeted to its lowest level in six-and-a-half years on fears over demand from China. West Texas Intermediate was down 5.2% to $38.35 a barrel. The commodity was on track for its first closing price below $40 a barrel since 2009.
The U.S. dollar made mixed moves against international currencies. The greenback was down more than 1% against the euro and Japanese yen, while spiking 1.2% against the Aussie dollar and 0.46% against the Canadian dollar.
U.S. bonds saw increased demand on Monday as investors sought a safe-haven asset in light of the increased risk of equities. U.S. 10-year bond yields fell below 2% for the first time in 4 months, down to 1.97%.
Benchmark indexes closed their worst week in nearly four years last week as a continued slowdown in China spooked equity and commodity traders. The S&P 500 was down 3.2% for the day and 7.5% since its May high, near the 10% decline which would constitute a correction.
Source: TheStreet
