The Dow Jones fell as concerns grow about future global growth, following poor European business sentiment and worries about Chinese economic growth.
Various market indices across the U.S. suffered, with the DJIA falling by 0.7 percent, from 116.81 points down to 17055.87, the S&P 500 index dropping by 0.6 percent down to 1982.77, and the Nasdaq Composite dropping by 0,4% down to 4508.69.
Global growth is a growing concerning among investors.
In Europe shares took a nosedives following news about poor German business sentiment and the eurozone manufacturing sector falling to a new low.
Investors are obviously making less risky positions and, instead, are making positions to protect themselves against potential losses.
However, despite today’s drop in American stocks, compared to last year the Dow is up by more than 2.9% and the S&P is up by more than 7.3% – with the S&P reaching a record high earlier this month.
People are still in the market, despite a somewhat pessimistic view (respectively) of the economic outlook of the global economy.
In Europe, the Stoxx Europe 600 Index declined by 1,4%, along with the French CAC 40 dropping by 1.9 and the Germany’s DAX Index dropping by 1.6%.
According to Phil Orlando, chief equity strategist at Federated Investors:
“The focus on Europe…is very much on the central bank. What’s [ECB President Mario] Draghi doing to attempt to reverse this economic malaise?”
More positive news came from Asia as Chinese manufacturing was up in September, wit preliminary HSBC China Manufacturing Purchasing Managers Index increasing to 50.5 from 50.2 from the month before, reassuring confidence in Chinas’s economic future.
American companies that have carried out corporate inversion have also been affected, with the Irish-based Shire PLC dropping by 2.3%. The U.S. government recently agreed on new laws that will crack down on American companies based overseas.
Tuesday also brought declines in shares of companies involved in so-called inversions, in which an American company buys a rival and moves its headquarters overseas to benefit from lower taxes. The White House late Monday moved to crack down on those deals. U.S.-listed shares of Ireland-based Shire PLC fell 2.2% and AbbVie Inc. shares fell 2%.