China fears drive down stocks and oil, fuel turmoil

Tue Sep 1, 2015 5:19pm EDT
 
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By Caroline Valetkevitch

NEW YORK (Reuters) - World stock indexes and oil prices slumped on Tuesday as weak Chinese data fueled worries about a slowdown in its economy, the world's second biggest, and sparked more market turmoil.

The fall in oil prices ended a three-day rally that had driven crude up more than 20 percent. Brent fell below $50 a barrel on concerns about global demand for petroleum.

U.S. stocks fell nearly 3 percent, with all three major U.S. equity indexes firmly in negative territory for the year-to-date. The benchmark S&P 500 is down 7 percent since Dec. 31.

The CBOE Volatility index , known as Wall Street's "fear gauge", was up 10.45 percent at 31.40, above its long-term average of 20. The index had spiked to 53.29 on Aug. 24.

The moves followed a stormy week that left investors concerned about further market losses due to slowing growth in China and the effect on the global economy. The S&P 500 on Monday posted its worst monthly decline since 2012.

The recent signs of weakness in big economies has raised doubts about earnings growth and fueled worries about whether central bank support could make a difference after years of loose policy around the globe.

Comments by Federal Reserve Vice Chairman Stanley Fischer over the weekend appeared to keep alive the chances of a U.S. interest rate increase in September.

"It's general risk aversion manifesting itself after a really bad August," said Mohannad Aama, managing director at Beam Capital Management LLC in New York. "The continued uncertainty about China is definitely adding to worries."   Continued...

 
A trader works on the floor of the New York Stock Exchange shortly after the market opened in New York September 1, 2015.  REUTERS/Lucas Jackson