US Stock Futures Rebound After China Cuts Rates
New York (Aug 25) The global stock selloff isn't over yet, but U.S. stock futures were bouncing back anyway after China's central bank trimmed interest rates for the fifth time in nine months.
After a tumultuous day in U.S. markets, Asian stocks traded lower again Tuesday. ahead of the news on the cut in China's rates.
Japan's Nikkei 225 dropped another 3.96% to 17,806.70, rolling back prices to December 2014 levels. In China, the Shanghai Composite hurtled 7.63% lower to 2,965.15. The Hang Seng index in Hong Kong rose 0.72% to 21404.96.
U.S. stock futures, however, were trading sharply higher, signaling a higher open on Tuesday. Futures for the S&P 500 were rising by 3.18% in premarket trading, as the Nasdaq's futures jumped 3.5% higher and Dow Jones Industrial Average futures were up 3.3%.
Must Read: Black Monday Poll: Where Do You Think Are Stocks Headed?
European stock markets rebounded on Tuesday after Monday's devastating global selloff. In London, the FTSE 100 was up 2.76% at 6,063.53 by late morning after slumping 4.67% on Monday. In Frankfurt, the DAX recovered 3.35% to 9,971.87 after a decline of 4.7% on Monday, and in Paris, the CAC 40 rose 3.29% to 4,527.54. On Monday, the Paris benchmark had plunged 5.35%.
Still, the volatility that has followed the steep selloff in global markets is likely to continue.
"The U.S. stock market is in a mode of uncertainty, at best," DoubleLine Capital's co-founder Jeffrey Gundlach told Reuters. "You don't correct all of this in three days."
After opening with an historic 1,000-point drop on Monday, the Dow Jones Industrial Average swung wildly throughout the session before closing down 3.6% or 584 points.
The S&P 500 officially entered correction territory Monday, falling 11% from its May peak, after dropping more than 3.9% over the session. The S&P 500 and Dow are on track for their worst month since February 2009.
Volatility peaked over the session on the huge moves on benchmark indexes. The Volatility Index, otherwise known as the 'fear index', rocketed 47% higher to 41.14.
High-momentum tech stocks pulled the Nasdaq 3.8% lower Monday. Major losers included Apple (AAPL - Get Report) , Netflix (NFLX - Get Report) , Amazon (AMZN - Get Report) , Google (GOOGL - Get Report) , Facebook (FB - Get Report) , and Twitter (TWTR) .
The selloff was fueled by 8.5% plunge in Chinese stocks Monday, which was quickly 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.
Source: TheStreet
