Disappointing Chinese manufacturing data weigh on global stock markets on Tuesday.
Analyst sees little relief for market other than technical support
U.S. stocks suffered their third-worst loss of the year on Tuesday as part of a global rout sparked by a new round of weak Chinese economic data.
China’s official manufacturing purchasing managers index fell to a three-year low, triggering a wide selloff in stocks across Asia and Europe that then spread to the U.S.
The S&P 500 SPX, -2.96% sank 58.33 points, or 3%, to 1,913, with all of its 10 sectors in the red. The Dow Jones Industrial Average DJIA, -2.84% lost 469.68 points, or 2.8%, to 16,058.35. All 30 of its components closed lower.
The Nasdaq Composite COMP, -2.94% slumped 140.40 points, or 2.9%, to 4,636.10, falling into negative territory for the year.
Tuesday marked the third-biggest daily drop of the year for the S&P 500 and the Dow, while for the Nasdaq, it is the third worst by percentage decline.
“The market is being driven by emotion,” said Robert Pavlik, chief market strategist at Boston Private Wealth LLC.
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Who knows what will trigger Fed intervention; that information is asymmetric, i.e. only known to Fed insiders.
Correspondent Bart D. recently speculated that the U.S. stock market was now "too big to fail," that is, that it was too integral to the global financial system and economy to be allowed to fail, i.e. decline 40+% as in previous bubble bursts.
he U.S. stock market is integral to the global financial system in two ways.Now that investment banks, pension funds, insurers and multitudes of 401K retirement plans are dependent on current equity valuations, a crash would impair virtually the entire spectrum of finance from hedge funds to banks to insurers to pension plans.
A decimation of these sectors would impact the U.S. economy and thus the global economy very negatively.
A Passing Thought...
