Nice try, but still a Dow-ner
Stocks rally, then plunge in last hour
TURNAROUND Tuesday ended with a thud.
Early-morning Wall Street gains disappeared in the final hour of trading, leaving the Dow Jones down more than 204 points after a morning surge that saw a rise of more than 400 points.
The Standard & Poor's 500 index was down 25.6 points, or 1.4%, while the Nasdaq dropped 19.76 points or 0.4% — both mirroring the Dow’s early uptick and eventual drop.
On Monday, plagued by problems in China’s troubled economy, the Dow suffered its worst session in four years, falling by more than 1,000 at one point before finishing down 588.40 points — a 3.8% loss.
The numbers initially went up Tuesday after China’s central bank cut its interest rate for the second time in as many months in an effort to boost the world’s second-largest economy.
Economists said the interest rate cut indicated the willingness of Chinese officials to move proactively on behalf of the global economy. There was some question among experts over the effectiveness of the cut.
“What we need to see to calm investors is positive economic data points out of China, and only when we see that will the rallies be sustainable,” Centre Asset Management investment director Xavier Smith told Reuters.
TURNAROUND TUESDAY tanked.
The strong stock rally that followed Black Monday’s meltdown fizzled toward the end of trading Tuesday after a last-minute selloff pushed the Dow another 200 points deeper into the red.
The blue-chip index had bounced back from the previous day’s 588-point plunge, surging to a more-than-400point gain shortly after the opening bell after yet another Chinese stock rout prompted the government to cut interest rates in an effort to boost its economy.
Investors buoyed by Shanghai’s move, along with bargain hunters looking for buying opportunities, also helped lift the S&P 500 and Nasdaq by more than 3% each for much of the day.
But any sense of optimism that U.S. stocks had hit bottom after Monday’s roller-coaster session evaporated in the last hour of trading, with the Dow closing down by 205 points — a swing of more than 600 points — and the S&P shedding 1.4%.
The sixth straight day of losses kept the Dow in correction territory, defined as a 10% decline from its recent high.
“It’s been crazy,” said Robert Chersi, a professor of finance and economics at Pace University’s Lubin School of Business and a former CFO of Fidelity Investments.
“We haven’t had a change of more than 3% in any given day in months, and then suddenly there have been these big swings intraday and end of day,” Chersi told the Daily News. “Is it all China-related? It’s too short a period to know what’s really driving it.”
The Dow, which closed at 15,666, has lost nearly 2,000 points in the past week and is down 12.1% for the year. The S&P has shed 9.3% in that time.