Wall Street Slammed After China Stock Woes

Wall Street Slammed After China Stock Woes

Source Link: www.foxnews.com

U.S. stocks suffered their worst one-day slide in more than eight months Tuesday, driving the blue-chip Dow average down more than 200 points, after China's main equity index plunged on concerns that share valuations there had become overextended.

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"I think that most of this is because the Chinese government ... has suggested they are going to try to take some steps to curb speculation."

All three major U.S. stock indexes broke below their 60-day moving averages — a sign that the momen

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It was so weird to see this. The market was down about 280 points. Seconds later the drop was close to 500 points...

Here's some other stories about this stock market drop:
Dow industrials plunge more than 500

Share sale knocks Chinese market, The Chinese stock market has suffered its worst day of trading in 10 years after a large wave of share selling by leading investors.

World Markets Fall After Plunge in China

Chinese share prices doubled last year as investors piled into the market following the completion of shareholding reforms that helped to reduce worries over a potential flood of shares entering the market.

But stocks have been extremely volatile this year, with the Shanghai index notching one-day drops of 4.9 percent and 3.7 percent in January — before recovering to hit new highs. On Monday, it closed at a record 3,040.60.

Tuesday, market heavyweights plunged on heavy selling by institutional investors, which in turn spooked retail investors who decided to cash in their recent gains rather than risk losing them in a severe market decline.

World shares wobble on China fear--from BBC

However, the government has been looking at ways of slowing growth in order to stop the economy from overheating, and many investors are worried that it may lead to tougher regulations that will limit stock-market investment.

At the same time, there are concerns that interest rates will have to be raised in order to rein in economic and price growth, further denting domestic demand for shares.

"Foreign companies which are particularly exposed to China have been badly affected," said Peter Dixon, an economist at Commerzbank.

[edit on 27-2-2007 by DontTreadOnMe]

i think it may be more to do with what greenspan said yesterday. strange how quickly it doubled.

you can gurantee someones getting rich today.

It's going back up at the moment.

Anyone buy at or near the bottom? I've been trading again since I was laid off and I about #e my pants when that happened at 2:50.

Interesting to see this come so quickly on the heels of Cheney's remarks about China's military intentions. Anybody see a conspiratorial cause-effect relationship there?

I find it strange how one man like Greenspan can run his mouth and say something, and all the higher ups play follow the leader.
Why is it when he says were going to go into a recesion we go into one and when he says were going to be ok were ok? Come' on theres something wrong here.

Originally posted by Shar
I find it strange how one man like Greenspan can run his mouth and say something, and all the higher ups play follow the leader.
Why is it when he says were going to go into a recesion we go into one and when he says were going to be ok were ok? Come' on theres something wrong here.

yep the last few hours reminded me of that film, trading places, and shows how speculation can turn things so quickly. well at least for all of us it did not end that bad.

i do agree though that the power of one man, is amazing, and how he can decide market fluctuations.

like i said above, i bet someone is out there getting rich, it just isn't us.

[edit on 2/27/2007 by andy1033]

We had MSNBC on, or maybe CNBC, and one commentator mentioned that perhaps someone hit the wrong button. It seems pretty hard to fathom a sell-off that would causae the entire DOW to drop 200 points in a metter of minutes! There were comments that it was an odd occurrence.

Regardless of what Greenspan said, one must also take note of the events in Asia, especially China.
Many investors flock to the Asian market to make a lot more money than they could in US markets. With talk that the Chinese market is trying to slow down, to reform itself, would cause great concern to those trying to get rich in the Asian market.
I also read something about a new capital gains tax somewhere in Asia.
Other markets besides the US suffered losses after the Chinese market news.

I don't buy the China excuse.

It's amazing how many people (even on ATS) are so willing to immediately buy the mainstream media's explanation of an event.

Why would a proposed rule change in one national market set off a domino effect in other national markets? Is (let's say) GM or Microsoft worth less because China wants to curb speculation? Of course not.

Something else is going on.

My bet is something blew-up in the derivatives market.
.

edit: if you don't know what I'm talking about, see this post on derivatives.

[edit on 2/27/2007 by Gools]

Interesting thought, Gools.
The stock market was closed in China when the goop hit the fan here. So, somtheing else is going on. And, what could cause a 200 point drop so quickly. And, where were the curbs we saw used previously when the market was falling.


I don't know much about the derivitives market. Even afater scanning your post above


However, they're saying that the market in New Zealand is opeing low after the sell off here. It's 10:39 am Wednesday in Auckland right now.
New Zealand Dollar Falls as Investors Unwind Bets Against Yen


They are now reporting on MSNBC that there was a computer glitch when the 200 point drop occurred!!!!
They are talking about a blimp in the derivitives and a systems overload.


[edit on 27-2-2007 by DontTreadOnMe]

Originally posted by DontTreadOnMe


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"I think that most of this is because the Chinese government ... has suggested they are going to try to take some steps to curb speculation."

yep...
over reaction to my mind, i reckon the fund managers and company coffer investing and the other movers-&-shakers...see a question mark
in the 'developing markets' & China/HongKong/Singapore exchanges in particular...

i just don't understand why the broad market plunged like it did and will likely continue to do over the week...
unless the 'managers' see the speculation on China equities isn't that influential on european & american equities, there will continue to be an orchestrated selloff...
which can create a rare opportunity for a more sane re-balancing by the shrewd managers using the China panic as their springboard.


because i'm in for the long haul, i 'm glad for the volitality,
but i feel bad for the unfortunates that got locked into this ~4% losses!

Originally posted by DontTreadOnMe
They are talking about a blimp in the derivitives and a systems overload.

They are?
VERY INTERESTING! Did they mention any names?

I don't have MSNBC but I'll check the website for links.
.

Not the website, but on the cable shows.
They were saying because of the huge volume, there was a system overload that may carry over into the morning.

I was searching the 'net and trying to hear what they were saying. I'm sure you would have gotten more out of it than I. Maria Bartawhatever and her guest were talking.

Two words:

Buy Metals

It doesn't help that oil is back up to over $61 a barrel either

I didn't find anything on MSNBC's site.

The more I think about this, the more I'm leaning to something happening in the derivatives market.

Either a major hedge fund is in serious trouble and liquidating or the market is finally catching up to the recent wave of sub-prime lender defaults.

Come to think of it, the sell-off started in China who hold a very large percentage of US mortgage assets.

If this is the case and not just some "computer glitch" this isn't over.

There's no way (in my mind at least) that China contemplating a capital gains type tax would result in the global sell-of we saw today.
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How much of that was driven by computer activated sell-offs?

What people forget is that our economy is an illusion and has been an illusion for quite some time . . .

Wait until the end of the year that's when the Sh is going to hit the fan.

Get ready, China has a lot of control over the US economy thanks to their generous loans to keep our illusion of stability alive.

the Asia markets open up in a couple of hours soon, we should carefully watch what happens because another major sell-off will take a huge effect on the US and Europeans markets.