Wall St. skids as China fears rattle investors

28 Sep 2015 | Author: | No comments yet »

Economic data this week to reflect impact of market turmoil.

US stocks fell, with equities down for a fifth consecutive session, as raw-material and energy shares retreated amid more signs of slowing in China while biotechnology companies extended last week’s selloff. “There’s no conviction in this market whatsoever and there hasn’t been for a very long time,” said Michael Ingram, a market strategist at BGC Partners in London. “If the Fed appears to be so hesitant, why should traders who are putting money to work on a daily basis be any more confident?

While earnings season doesn’t kick into full gear until mid-October, next week will give investors a wealth of economic data covering the period where U.S. stocks started sliding into correction territory. The other issue is what’s going on in China.” Biotechnology shares tumbled on Friday, offsetting gains fueled by Fed chair Janet Yellen’s reassurances that turbulence in emerging markets won’t harm US growth. U.S. stocks finished lower last week, with the Dow Jones Industrial Average DJIA, -1.47% down 0.4% and the S&P 500 Index SPX, -1.91% sliding 1.4%, and both saw a second straight week of losses.

Dudley said on Monday that the central bank will “probably” raise interest rates later this year despite uncertainties over global growth. “I think that the economy is doing pretty well,” Mr Dudley said at an event in New York. A report on Monday showed US household spending climbed more than forecast in August and incomes also rose as the biggest part of the US economy continued to power past a global slowdown. While Federal Reserve Chairwoman Janet Yellen said Thursday an interest rate hike is likely this year and revised GDP figures rose, indicating a stronger U.S. economy, investor confidence has taken a hit lately, with many speculating how deep the stock correction can go. The sector, long a darling among investors, sustained deep losses earlier in the week following concerns about high drug prices in the health-care industry.

Thursday brings September’s Institute for Supply Management manufacturing report along with car sales data for the month, while Friday is reserved for the September jobs report. “All of this data will be parsed for signs that the five-year-old slowdown in China is impacting the U.S. economy,” John Canally, investment strategist and economist at LPL Financial, said in a recent note. We’re losing what little leadership we had left.” The Nasdaq Biotech Index slid into a bear market on Friday amid its worst weekly decline in four years. In an interview, Canally said the economic data dump this week takes on special significance because the turmoil in U.S. stocks didn’t hit until late August, so the effect of that event on economic data will show up more clearly in September’s data. The rout was sparked by a tweet last Monday from Democratic presidential hopeful Hillary Clinton suggesting there may be “price gouging” in the market for prescription drugs. But when the Nasdaq Composite’s 50-day moving average falls below its 200-day, creating a so-called “death cross” pattern on the charts, it might not be such a bad omen for U.S. stocks.

Coming Up: Container freight rates from Asia to Europe fell for the third straight week to $313 per box and analysts predict they could soon hit again the June all-time low of $205 when carriers could not even cover their fuel cost. Four years ago, the death crosses for the three major indexes didn’t happen until after they each had fallen into correction that August in the wake of Standard & Poor’s downgrading of U.S. government debt. China’s President Pledges to Fight Poverty, Gender Discrimination: China’s President Xi Jinping sought to mollify concerns about his country’ growing power by pledging billions of dollars to fight poverty and gender discrimination during a U.N. meeting. President Barack Obama and Indian Prime Minister Narendra Modi are scheduled to hold talks Monday, as their two countries continue to tighten strategic and economic ties in the face of an increasingly assertive China.

Bonds Flash Warning Sign: Yield spreads between corporate debt and Treasurys have been widening, a trend that in the past has foreshadowed economic problems. What investors need to discern is whether for the S&P–and especially the Nasdaq–is whether death crosses are backward-looking and highlight weakness that’s already happened or merely a sign of the pain that’s still to come. Vocus, M2 Group Plan Merger: In the latest redrawing of Australia’s telecommunications sector, Vocus Communications Ltd. said Monday it has agreed to an all-share merger with rival M2 Group. Activist Pressure Prompts Lone Star to Boost Offer for Developer: Lone Star Funds raised its offer for Quintain Estates & Development, which plans to develop a site around London’s Wembley Stadium, after pressure from activist hedge fund Elliott Associates.

Morning MoneyBeat Daily Factoid: On this day in 1941, Ted Williams played a doubleheader against the Philadelphia Athletics, collecting six hits and lifting his average to .406. Sarao’s Extradition Hearing Delayed After New Evidence: Navinder Sarao, the British trader who allegedly contributed to the 2010 stock market ‘flash crash,’ must wait until next year to learn his fate after his U.S. extradition hearing was pushed back. Brazil’s Sugar Cane: An Emerging Debacle: The woes of Brazil’s sugar-cane industry offer a stark illustration of the problems confronting emerging markets.

Boaz Weinstein’s Hedge Fund Accused of Cheating Investor: Boaz Weinstein, the onetime Deutsche Bank trading star who now runs Saba Capital, was accused in a lawsuit Friday of cheating one of his biggest investors earlier this year when they asked for their money back. Probably Better Than Professional Forecasters: A new book suggests that amateurs might well be less-hapless market forecasters than the experts — so long as they go about it the right way, writes Jason Zweig. U.S.-listed shares of Novo Nordisk have climbed 3.7% ahead of the bell after the Food and Drug Administration approved the Danish drug maker’s long-acting Tresiba insulin product. Shell to Cease Oil Exploration in Alaskan Arctic: Royal Dutch Shell PLC on Monday said it would cease drilling in the Arctic after disappointing results, moving to end a costly project that caused a surge of environmental protests and will likely cost the company billions in charges. This Fintech Company Will Give You Costly Investment and Banking Services for Free: Last week, a self-styled “next generation financial services platform” called Aspiration announced it had garnered $15.5 million in funding from prominent venture capital funds and marquee investors such as TPG Capital founder David Bonderman and financier/former car-czar Steven Rattner.

The S&P 500′s BofA Effect: Since the financial crisis, banks — and Bank of America Corp. in particular — have often been a drag on S&P 500 earnings. Investors Pull Back From Junk Bonds: Investors are pulling back from the junk-bond market, in a shift that threatens to slow the global mergers-and-acquisitions boom.

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