BackWall St slips on China sell-off; energy, banks slide
Wall St slips on China sell-off; energy, banks slide
PremiumNew York: US stocks fell on Monday as concerns about the global economy’s health weighed on Wall Street following a sell-off in Chinese equities.
Energy shares led the decline after the sharp drop in China’s main stock index, while oil slipped below $70 a barrel on increased worries about global energy demand.
Shares of Chevron Corp tumbled 1.1% to $69.94 and Exxon Mobil dropped 1.4% to $69.15. The S&P Energy index was down 1.8%.
The Shanghai Composite Index fell nearly 7% to a three-month low on fears that China’s government is trying to moderate economic growth and choke off speculation in its stock market by tightening bank lending.
“China is a very important engine of growth to the rest of the world," said Craig Hester, chief executive of Hester Capital Management in Austin, Texas.
“People need to see China continue its growth, and a slowdown in the stock market there will slow us down, too."
Heading into a traditionally soft period of the year for stocks, investors are increasingly becoming more worried about a pullback after a 50% rally from multi-year closing lows in March.
Despite the day’s lackluster performance, the Dow ended August up 3.5%, while the S&P 500 advanced 3.4% and Nasdaq gained 1.5%.
In Monday’s session, the Dow Jones industrial average fell 47.92 points, or 0.50%, to end at 9,496.28. The Standard & Poor’s 500 Index shed 8.31 points, or 0.81%, to 1,020.62. The Nasdaq Composite Index declined 19.71 points, or 0.97%, to close at 2,009.06.
Financials tumble
Financial stocks, which enjoyed a strong rally last week, changed their course after a number of bearish notes from analysts.
Rochdale Securities analyst Richard Bove wrote that in the short term, “a reaction to the recent move up in the stocks may develop."
In addition, Barron’s recommended profit-taking in Citigroup and said American International Group shares were overpriced after gaining more than 50 percent last week.
Citi was down 4.4% at $5.00 while AIG dropped 9.8% to $45.33.
The weakness in energy and financial stocks overshadowed the news of two large mergers on Monday.
Walt Disney Co agreed to buy Marvel Entertainment for $4 billion, while Baker Hughes Inc said it would buy BJ Services Co for $5.5 billion.
Marvel shares soared 25.2 percent to $48.37, while BJ Services’ stock was up 4.1% at $16.06.
Also on Monday, the Institute for Supply Management-Chicago’s business barometer rose to 50.0 in August. The level was higher than expected, and was on the dividing line between growth and contraction in the sector.
Volume was light on the New York Stock Exchange, with 1.38 billion shares changing hands, below last year’s estimated daily average of 1.49 billion.
On the Nasdaq, about 2.33 billion shares traded, above last year’s daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of 11 to 4. On the Nasdaq, about 19 stocks fell for every seven that rose.
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