Posted By RichC on January 8, 2016
January 2016 has not given investors an optimistic start as stocks sold off for another day on Thursday. The slide gives the Dow its worst start to begin a year since the 30-stock index was created in 1928. Fingers are pointing to economic woes and government financial manipulation in China as well as world oil prices hitting 12-year lows due to slowing demand and excess supply.
China allowed the biggest fall in the yuan currency in five months, adding to investor fears about the health of its economy, while Shanghai stocks .SSEC were halted for the second time this week after another steep selloff.
Oil prices fell to 12-year lows and copper prices touched their lowest since 2009, weighing on energy and materials shares. Shares of Freeport McMoran (FCX.N) dropped 9.1 percent to $5.61. All 10 S&P 500 sectors ended in the red, though, and the Nasdaq Biotech index .NBI fell 4.1 percent.
“People see the weakness in China and in the overall equity market and think there’s going to be an impact on corporations here in the United States,” said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
“When you have a market that begins a year with weakness, people are sort of suspect anyway. The economy isn’t moving all that well, the outlook is modest at best, and they don’t want to wait for the long term. China creates more uncertainty.”
The Dow Jones industrial average .DJI closed down 392.41 points, or 2.32 percent, to 16,514.1, the S&P 500 .SPX had lost 47.17 points, or 2.37 percent, to 1,943.09 and the Nasdaq Composite .IXIC had dropped 146.34 points, or 3.03 percent, to 4,689.43.