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Wallstreet plummets after chinese stocks drop { January 2007 } Original Source Link: (May no longer be active)
http://abcnews.go.com/Business/wireStory?id=2907807http://abcnews.go.com/Business/wireStory?id=2907807
Stocks Fall As Chinese Stocks Take a Hit
Wall Street Plummets After Chinese Stocks Take a Big Hit
By MADLEN READ
The Associated Press
NEW YORK Feb 27, 2007 (AP)— Wall Street fell sharply Tuesday, joining a global stock decline on growing concerns about slowing economies in the U.S. and China. Worries that U.S. stocks are about to embark on a major correction fed the drop, which took the Dow Jones industrials down more than 110 points.
A 9 percent slide in Chinese stocks earlier set the tone for U.S. trading. Concerns that China's economy will slow sent many investors selling just a day after they sent Shanghai's benchmark index to a record high close.
"Corrections usually happen because of a catalyst, and this may be it," said Ed Peters, chief investment officer at PanAgora Asset Management. "The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a knee-jerk reaction with that kind of drop."
A warning from former Federal Reserve Chairman Alan Greenspan Monday that the U.S. economy may be headed for a recession also took a toll. A Commerce Department that orders for durable goods in January dropped by the largest amoung in three months exacerbated concerns about the economy, as did a Standard & Poor's index showing single-family home prices across the nation were flat in December.
A suicide bomber attack on the main U.S. military base in Afghanistan where Vice President Dick Cheney was visiting also rattled the market.
In midmorning trading, the Dow Jones industrial average dropped 110.39, or 0.87 percent, to 12,521.87.
Broader stock indicators also fell sharply. The Standard & Poor's 500 index was down 15.75, or 1.09 percent, to 1,433.62, and the Nasdaq composite index was down 39.51, or 1.58 percent, to 2,465.01.
China's stock market plummeted Tuesday from record highs as investors took profits when concerns arose that the Chinese government may try to temper its ballooning economy by raising interest rates again or reducing more of the money available for lending. The Shanghai Composite Index tumbled 8.8 percent to close at 2.771.79, its biggest decline since it fell 8.9 percent on Feb. 18, 1997.
Japan's Nikkei stock average fell a more moderate 0.52 percent. But European markets were clearly rattled in afternoon trading, Britain's FTSE 100 was down 2.43 percent, Germany's DAX index was down 2.44 percent, and France's CAC-40 was down 2.81 percent.
Bond prices rose as investors bought into the safe-haven Treasury market, with the yield on the benchmark 10-year Treasury note dropping to 4.60 percent from 4.63 percent late Monday.
The bond rise was sparked primarily by the durable goods orders, which the Commerce Department said fell 7.8 percent, much more than what the market expected. A later report from the National Association of Realtors showing that sales of existing homes rose in January by the largest amount in two years pared some of bonds' gains, but the data didn't erase housing slump concerns median home prices fell for a sixth straight month.
The existing homes data and a Conference Board report that showed that consumer confidence in the U.S. economy rising unexpectedly in February failed to lift the market.
Oil prices dropped 76 cents to $60.63 a barrel on the New York Mercantile Exchange on worries that Chinese demand could be dampened should its economy cool off.
The dollar slipped against other major currencies, while gold also edged lower.
The Dow has been climbing at a steady rate since last summer, but over the past few trading sessions, stocks have pulled back on the worry that the market is due for a correction. Many analysts noted that the Dow hadn't seen a 2 percent decline in 121 sessions.
Declining issues outnumbered advancers by about 8 to 1 on the New York Stock Exchange, where volume came to 361.97 million shares.
The Russell 2000 index of smaller companies was down 15.38, or 1.87 percent, at 808.31.
NYSE-listed shares of Chinese companies plunged. China Mobile Ltd. tumbled $3.58, or 7.3 percent, to $45.70. Mindray Medical International Ltd. dropped $2.46, or 8.6 percent, to $26.25. China Eastern Airlines Corp. fell $5.07, or 15 percent, to $28.68.
On the Nasdaq, Internet company Baidu.com Inc. fell $4.44, or 4 percent, to $107.27. Shanda Interactive Entertainment Ltd., which develops online games, fell 95 cents, or 3.8 percent, to $23.97. Netease.com Inc. fell 68 cents, or 3.1 percent, to $21.13.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
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