The US stock market rattled today as tech stocks took a nosedive and Alibaba stock went down by 4% on the company’s second day of trading after a record breaking opening on Friday – shares of Alibaba soared by 38% when it went public on Friday.
There are concerns among investors that the Chinese economy is not accelerating at an optimal rate, which has affected markets across the world.
The Dow Jones Industrial Average dropped by 0.5% in afternoon trading hours (from its record high in Friday) down to 17203. The S&P 500 dropped by 0.8%, down to 1994. The Nasdaq Composite Index declined by 1.3%, down to 4519. The Russell 200 index dropped the most, by 1.6%.
Yousef Abbasi, a market strategist at brokerage JonesTrading Institutional Services, told Fox Business that US stocks “got through an important week unscathed,” adding, “today there is a lot of reflection, and people are digesting last week’s moves.”
There has been less optimism about Chinese growth in the past few weeks as data indicates that its industrial output growth has slowed to its lowest level since the 2008 Great Recession.
Energy stocks also took a big hit, dropping by 1.5%, as the benchmark U.S. oil contract for October delivery declined by 1.2% ($1.10) to $91.53 per barrel.
Asian markets also dropped, with the Japanese Nikkei falling by 0.7% to 16,205.90 and the Hong Kong’s Hang Seng index falling by 1.4% to 23,955.49.
In Europe the British FTSE fell by 0.7% and the German DAX fell by 0.5%.
Analysts say that many traders have been placing protective positions recently in the wake of stocks reaching record highs.
Stacey Gilbert, head of derivatives strategy at Susquehanna Financial Group, said:
“Investors are certainly protective as we head into the end of the year.”