| USA TODAY | - |
U.S.
stocks fell sharply for a second straight day as anxious investors
grappled with the the ripple effects caused by a further devaluation of
China's currency and rising concerns about the health of China's wobbly
economy.
China’s surprise move Monday to reduce the value of its currency
versus the dollar has Wall Street fearing a currency war. Adam Shell
with America’s Markets.
Global markets plunged for a second day as investors in Asia, Europe and the U.S. continue to digest the fallout from China's move to reduce the value of the yuan to boost its lagging exports and weakening economy.
"Risky assets remain under pressure," Guillermo Felices of Barcalys told clients in a report. "A key market concern is that the latest (Chinese) measures respond to much weaker Chinese growth than expected."
China, which is the world's second-biggest economy, has been a major driving force of the global economy for years. Given China's clout in the world economy, any signs of a more severe slowdown there is viewed bearishly by investors, as slower growth equates to less sales, smaller corporate profits and, subsequently, lower stock prices.
The Dow Jones industrial average, which was down almost 270 points earlier in the trading session, or 1.5%, pared some of its losses and was off 90 points, or 0.5% around 3:00 p.m. ET. The Dow suffered a 212-point drop Tuesday. The blue-chip barometer has dropped nine out of the last 10 trading sessions and started today's session 5% below its record close of 18,312.39 back on May 19.
The Standard & Poor's 500 index was down 0.4% after dropping as much as 1.3% earlier in the session and slipping briefly into the red for 2015. The Nasdaq composite index tumbled 0.9%.
Oil prices recouped a small portion of Tuesday's losses as U.S. benchmark crude rose 0.3% to $43.23 a barrel, following Tuesday's 4.2% drop.
China's central bank said that the daily reference or fixing rate for the yuan against the dollar stood at 1.6% Wednesday after it was cut by 1.9% Tuesday in an effort to boost its lagging economy by making its goods more affordable to foreign buyers.
The country’s central bank intervened to prop up the currency and told state-owned banks to sell dollars on its behalf in the last 15 minutes of trading Wednesday after the yuan fell almost 2% to its lowest level against the dollar in four years, The Wall Street Journal reported, citing people familiar with the matter. A dollar bought around 6.45 yuan.
Japan’s Nikkei 225 index lost 1.6% while Hong Kong’s Hang Seng index dropped 2.4%. The Shanghai Composite was 1.1% lower.
European shares tumbled Wednesday — Germany’s DAX index plunged 3.3%, France’s CAC 40 was 3.4% lower and Britain’s FTSE 100 was down 1.4%. The Athens Stock Exchange was 1.5% lower.
The decision to devalue the yuan accentuated worries over the health of China’s economy — the world’s second-largest — causing stocks to tank Tuesday and Apple to slide 5.2%. Oil also fell to a 6-year low.
Contributing: USA TODAY's Kim Hjelmgaard, Associated Press
Bloomberg's Stephanie Ruhle reports on today's top news stories.
Bloomberg
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