China drop, growth worries sink stocks; dollar fades
By Chuck Mikolajczak
NEW YORK (Reuters) - World stock markets fell and Brent oil prices remained under pressure on Thursday as another slump in the equity market of China, the No. 2 economy, stoked concerns about sluggish global growth.
Wall Street was also weighed down by a drop in finance stocks and was poised for a third day of declines as expectations cooled for a U.S. interest rate hike in September, which also kept the dollar lower. The declines in equities put both the Dow and S&P 500 into negative territory for the year.
Stocks in China tumbled again, with both the Shanghai and Shenzhen markets .SSEC .CSI300 down more than 3 percent. Investors have been concerned a weak currency and slowing economy may spur further capital outflows.
"The narrative is still being shaped by two things primarily – one is the ongoing fallout from both by the apparent softening of growth in China, the volatility within the Chinese equity markets and also the concerns that China could be at the beginning of a broader devaluation of the currency," said Mike Ryan, chief investment strategist at UBS Wealth Management Americas in New York.
"The other part, quite frankly is related to the Fed."
Financials .SPSY were the among worst performing of the 10 major S&P sectors, down 1.5 percent. The drop comes in the wake of minutes released Wednesday from the Federal Reserve's July meeting, which cooled expectations the Fed will start to raise interest rates as early as September, the first such move in nearly a decade. Continued...