More negative and strange news out of China has continued to confound markets across the globe, making last week’s temporary rally look like a mirage. The Dow was down as much as 198 points in midday trading on Monday not long after a China state broadcaster put a financial journalist on television to “confess” to sparking a panic that led to “great losses” on the stock market. This horse-and-pony show came on the heels of a week in which the Shanghai Composite plunged 8% as more and more fear the repercussions of the nation’s economic slowdown.
MarketWatch’s Shawn Langlois aptly summed up the view of many investors. “This Monday, like so many before, already stinks. The red ink is rising.”
The Dow drop also wiped out some positivity that came from the financial news of late last week, when U.S stocks picked up and some other Asian markets jumped in Friday trading. The rally was much-needed news for corporations that have been reeling for months as sagging emerging market currencies hurt earnings. Revenue for the S&P 500 components was already down 3.3% in the second quarter, according to CNBC.
But there seems to be no reprieve in sight, and markets have gained no more clarity on whether the Federal Reserve will raise interest rates at a September meeting that is just over two weeks away. This, on top of the general economic slowdown in China, cheap oil prices, and emerging market currency problems, will continue to plague traders from Shanghai to New York. Investors across the globe haven’t known which way is up for weeks now, and uncertainty is continuing to reign.
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