AP Top News at 6:05 p.m. EDT
US stocks extend losses as early rally fades
A rally in U.S. stocks evaporated in the minutes before the closing bell Tuesday, sending the Dow Jones industrial average down more than 200 points and extending Wall Street's losing streak to six days. For most of the day, it appeared that the market had shaken off some of its worries about the slowdown in China, and at one point the Dow was up by as much as 441. But sell orders began pouring in in the last 15 minutes of trading.
A rally in U.S. stocks evaporated in the minutes before the closing bell Tuesday, sending the Dow Jones industrial average down more than 200 points and extending Wall Street's losing streak to six days. For most of the day, it appeared that the market had shaken off some of its worries about the slowdown in China, and at one point the Dow was up by as much as 441. But sell orders began pouring in in the last 15 minutes of trading.
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US stocks extend losses as early rally fades
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A
rally in U.S. stocks evaporated in the minutes before the closing bell
Tuesday, sending the Dow Jones industrial average down more than 200
points and extending Wall Street's losing streak to six days.
For
most of the day, it appeared that the market had shaken off some of its
worries about the slowdown in China, and at one point the Dow was up by
as much as 441. But sell orders began pouring in in the last 15 minutes
of trading.
The Dow ended with a loss of
204.91 points, or 1.3 percent, at 15,666.44. The Standard & Poor's
500 index fell 25.59 points, or 1.4 percent, to 1,867.62. The Nasdaq
composite declined 19.76 points, or 0.4 percent, to 4,506.49.
The
rally came after China lowered interest rates to try to boost the
world's second-biggest economy. Other world markets surged on the news
out of Beijing, and for a while, it appeared that U.S. stocks would
follow suit and that the global sell-off might stop. But Wall Street
quickly swung from positive to negative territory.
"The
return to a more traditional stimulus from China helped excite many
investors," said Jeff Kleintop, chief global investment strategist at
Charles Schwab. "But, in fact, this is more likely the start of a
longer-term period of volatility."
Stocks had
also gotten a lift from economic reports showing a rebound in U.S.
consumer confidence and sales of new American homes.
The three major U.S. indexes have now lost ground six days in a row, with the Dow falling about 1,900 points over that period.
The
S&P 500 is down 12 percent from its record close of 2,130.82 on May
21. That puts it in what Wall Street calls a "correction" - a drop of
at least 10 percent from its most recent high.
China
cut its interest rates for the fifth time in nine months in a renewed
effort to shore up economic growth. The central bank also increased the
amount of money available for lending by reducing the reserves banks are
required to hold.
A slowdown in China has the
potential to significantly crimp demand for oil and other commodities, a
ripple effect that could dampen global economic growth.
"The
Chinese economy is going to be on this bumpy road for a while, and it
will have ebbs and flows that will no doubt have a serious impact on the
global economy," said Kamel Mellahi, professor at the Warwick Business
School. "What we are seeing now is a dress rehearsal of things to come."
Beyond
China, traders are waiting for clarity from the Federal Reserve, which
has signaled it could begin raising its key interest rate from near zero
for the first time in nearly a decade as early as this year. The Fed
isn't expected to deliver a policy update until it wraps up a meeting of
policymakers in mid-September.
European
markets recovered almost all their losses from Monday's sell-off.
Germany's DAX jumped 5 percent, while France's CAC-40 rose 4.1 percent.
The FTSE 100 index of leading British shares gained 3.1 percent.
China's
central bank took action hours after the country's main stock index
closed sharply lower for a fourth day. The Shanghai stock index slumped
7.6 percent, on top of Monday's 8.5 percent loss.
Tokyo's
Nikkei 225 also closed lower, sliding 4 percent. But other markets in
Asia posted modest recoveries, including Hong Kong and Sydney.
Energy
company Pepco Holdings declined the most in the S&P 500 on Tuesday
after regulators in Washington rejected its proposed merger with Exelon.
Pepco stock shed $4.44, or 16.5 percent, to $22.51.
Best
Buy recorded the biggest gain in the index, climbing $3.68, or 12.6
percent, to $32.95, after the home electronics chain reported
better-than-expected results for the quarter.
Oil
rebounded from its lowest closing level in more than six years. The
price of U.S. crude rose $1.07, or 2.8 percent, to $39.31.
U.S. government bond prices fell, pushing up the yield on the 10-year Treasury note to 2.07 percent.
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