Critical Observer

US stocks give up gains heading into the close

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NEW YORK (AP) — The latest on the global financial market turmoil (all times local): 3:42 p.m. U.S. stocks are giving up the gains shortly before the market close after a day in which they surged back on an interest-rate cut by China's central bank. 
 
The Dow Jones industrial average was up three points, or 0.1 percent, at 15,886. The Standard & Poor's 500 index gained one point, or 0.1 percent, to 1,895. The Nasdaq composite rose 39 points, or 0.9 percent, to 4,565. 
 
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3:04 p.m. 
The price of oil logged its biggest gain in more than two months, as it rebounded from its lowest closing level in more than six years. 
 
The price of U.S. crude rose $1.07, or 2.8 percent, to $39.31, its biggest one-day gain since June 9. Brent crude, a benchmark for international oils used by many U.S. refineries, gained 52 cents, or 1.2 percent, to $43.21. 
 
Natural gas and heating oil prices also rose, and wholesale gasoline dropped. 
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2:13 p.m. 
U.S. stocks are paring their gains, after surging in early trading on news that China had cut interest rates to shore up its economy. 
 
The Dow Jones industrial average rose 213 points, or 1.4 percent, to 16,088 as of 2: 18 p.m. Eastern time. It was up as much as 430 points earlier in the day. 
 
The Standard & Poor's 500 index is up 27 points, or 1.5 percent, at 1,920 and the Nasdaq composite index gained 105 points, or 2.3 percent. 
 
Metals have closed for the day; 
Gold fell $15.30 to $1,138.30 an ounce. Silver dropped 15.2 cents to $14.61 an ounce. Copper rose 5.5 cents to $2.31 per pound. 
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12:01 p.m. 
U.S. stocks are sharply higher in midday trading after China's central bank cut its key interest rate in a bid to boost growth in the world's second-largest economy. Concerns over a slowdown in China's economy rattled global markets on Monday. 
 
The Dow Jones industrial average was up 333 points, or 2.1 percent, at 16,204 as of 12:01 p.m. Eastern Tuesday. The Standard & Poor's 500 index rose 43 points, or 2.2 percent. The Nasdaq composite gained 141, or 3.1 percent, to 4,668. 
 
Oil also rose, but was still trading below $40 a barrel. 
 
Treasury notes fell, pushing up the yield on the 10-year benchmark note to 2.10 percent. 
 
Best Buy's stock surged 14 percent after it reported earnings that handily beat analysts' estimates. The consumer electronics chain benefited as shoppers picked up major appliances, large screen televisions and mobile phones. 
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11:14 a.m. 
The New York Stock Exchange invoked a rarely-used rule both on Monday and Tuesday to help ensure a smoother open to the stock market. "Rule 48" allows designated market-makers to forgo their obligation to circulate price indications before the opening bell. It is only used when there is the potential for extreme market volatility. 
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10:13 a.m. 
Stocks stay higher in the U.S. after a report shows that Americans stepped up their purchases of new homes in July, with sales surging in the Northeast. 
 
The Commerce Department says new-home sales rose 5.4 percent last month to a seasonally adjusted annual rate of 507,000, recovering from a slide in purchases in June. 
 
All 10 sectors in the S&P 500 index are higher, led by gains for technology stocks. 
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9:30 a.m. 
U.S. stocks jumped at the open after China's central bank cut interest rates to support its economy. 
The Dow Jones industrial average rose 296 points, or 1.9 percent, to 16,180.61, as of 9:45 a.m. 
Eastern time. The Standard & Poor's 500 index climbed 38 points, or 2 percent, to 1,932. The Nasdaq composite rose 109 points, or 2.4 percent, to 4,635. 
 
Oil prices are up, but U.S. crude is still trading below $40 a barrel. 
 
Treasury notes are falling, pushing up the yield on the 10-year benchmark not to 2.08 percent. 
 
Best Buy was the biggest gainer in the S&P 500 index. The stock surged 16.4 percent after its fiscal second-quarter results handily beat analysts' estimates as shoppers picked up major appliances, large screen televisions and mobile phones 
 
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8:30 a.m. 
China's interest rate cuts will not be enough to ease concerns about the country's economy, says Kamel Mellahi, professor at Warwick Business School in Britain. 
 
"The Chinese economy is going to be on this bumpy road for a while and it will have ebbs and flows that will no doubt have a serious impact on the global economy," he says. 
 
The Chinese central bank cut its key interest rate and deposit rate on Tuesday after its main stock market plunged for a fourth day. The move boosted markets around the world. 
 
Mellahi says that while the rate cuts may buoy markets in the short-term, the underlying causes of investors' concerns — the slowdown in the Chinese economy — will last for some time. 
 
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8:00 a.m. 
Wall Street futures are rallying further after China's central bank cut interest rates to support its economy. 
 
Dow futures are up 600 points, or 3.8 percent, while the broader Standard & Poor's 500 futures are up 72.8 points, or 3.9 percent. 
 
The jump follows a stomach-churning day on Monday, when the Dow plunged more than 1,000 points at one point before finishing down 588.40 points, or 3.6 percent. The Standard & Poor's 500 index slid 77.68 points, or 3.9 percent, into "correction" territory — jargon for a drop of at least 10 percent from a recent peak. The last market correction was nearly four years ago. 
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US stocks give up gains heading into the close

NEW YORK (AP) — The latest on the global financial market turmoil (all times local): 3:42 p.m. U.S. stocks are giving up the gains shortly...

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Dow closes down down 588 points

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NEW YORK — The Dow plunged as much as 1,000 points at the open on Monday — but it rebounded a bit and closed 588.47 points down at 4 p.m, representing the worst one-day loss since August 2011. 
 
After recovering from those initial scary losses, the final drop was 3.58 percent. 
 
Global fears about China’s economic slowdown are shaking stock markets around the world for a second week in a row. The wave of selling knocked the S&P 500 into correction mode for the first time since 2011. 
 
Within minutes, the Dow plummeted as much as 1,089 points. That is the largest point loss ever during a trading day, surpassing the Flash Crash of 2010. 
 
“We have not seen this level of full-blown panic in markets for quite some time,” said Peter Kenny, chief market strategist at Clear Pool Group, a financial technology firm. 
 
However, Monday was not that bad compared to “Black Monday” in 1987. Yes, there’s a lot of panic, but the Dow tumbled a whopping 22.6 percent on October 19, 1987. On Monday, the Dow was only down about 6.6 percent at its worst point. If this were a true “Black Monday” like what happened in 1987, the Dow would have fallen 3,700 points. 
 
While we are into correction territory, it’s not unexpected. At the moment, the Dow, S&P 500 and Nasdaq indexes — America’s “Big 3” — are all in correction mode. They peaked in the spring and have lost over 10 percent since then, meaning a correction. However, a lot of experts say America was overdue for a correction. They are natural — kind of like needing to tap the breaks on a bike or car sometimes. 
 
It all started with Shanghai’s 8.5 percent drop 
 
The dramatic selling began overseas. China’s Shanghai Composite plummeted 8.5 percent, wiping out all of its massive gains so far this year. Not only has an apparent bubble in Chinese equities popped, but the country’s economy may be slowing much faster than feared. 
 
Last week’s big selloff gathered serious momentum after China said its manufacturing activity — a critical metric on growth — tumbled to a six-year low in July. 
 
Fears of China contagion 
 
China is the world’s second-biggest economy. Its explosive growth in the last two decades has been the engine for the global economy. Its enormous appetite for raw materials like oil, copper and iron ore fueled global growth, especially in emerging markets like Brazil that are rich in natural resources. 
 
But that story has been completely derailed by China’s economic slowdown. Just how much China slows down matters greatly to investors around the world. 
 
All U.S. stock market indexes are in correction 
 
Fears about the health of China’s economy have ratcheted up to the point that the S&P 500, made up the largest U.S. companies, is now sitting in “correction” territory — a 10 percent decline from a recent peak. 
 
Both the Dow and Nasdaq fell into correction mode on Friday, the first since 2011. 
 
But stocks are up about 200 percent since crisis 
 
It’s worth remembering that these steep losses come after a tremendous bull run for stocks. 
 
The S&P 500 has skyrocketed 220 percent since bottoming out at 666 during the Great Recession in March 2009. At its lows on Monday, it was at 1,866.86. 
 
Mohamed El-Erian, chief economic adviser at Allianz, believes longer term the correction will be a healthy thing for the market. 
 
“It will bring financial markets closer to what’s justified by fundamentals. Therefore, there will be less of a risk of a financial collapse down the road,” El-Erian told CNN. 
 
Oil continues downward march too 
 
Crude oil plunged below $39 a barrel on Monday for the first time since 2009. A global economic slowdown is eating into demand for oil at a time when supplies remain extremely elevated. 
 
Energy is still a substantial part of the U.S. economy and stock market. When oil prices slide this much, it means a lot of companies aren’t making money anymore. That hurts U.S. companies and many countries that depend heavily on profits from selling oil. 
 
10-year yield below 2 percent 
 
Another sign of fear: The 10-year Treasury yield slid below 2 percent on Monday. That’s the lowest level since April and a sign that investors are fleeing to the relative safety of American government debt. 
 
It also signals that Wall Street believes the Federal Reserve may have to delay its expected interest rate hike from September until later in the year or even 2016. 
 
Will the bull market survive? 
 
Ed Yardeni, president of Yardeni Research, believes the selloff has created an opportunity for investors “with the stomach to jump in.” 
 
“I think we’ll see the markets make a comeback. The fundamentals of the U.S. economy remain good, especially compared with everybody else,” Yardeni said. 
 
That would mean the bull market that began more than six years ago will survive. The S&P 500 would need to close below 1,708 to be classified a bear market, which is defined as a 20 percent decline from a previous high. Currently, the S&P is at 1,934. Germany, on the other hand, tumbled into a bear market on Monday. 
 
Bear market for Apple 
 
Many of America’s favorite stocks are now in “bear market” territory, including Disney, Tesla and even Apple. 
 
Apple CEO Tim Cook sought to ease investor anxiety. Cook told CNBC that Apple has experienced “strong growth” in China over the last two months. He said iPhone activations have actually “accelerated” in recent weeks and China continues to represent “unprecedented opportunity over the long term.”

Dow closes down down 588 points

NEW YORK — The Dow plunged as much as 1,000 points at the open on Monday — but it rebounded a bit and closed 588.47 points down at 4 p.m,...

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