US Stocks Extend Decline

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US Stocks Extend Decline

On Thursday, US stocks extended their previous day’s losses by falling further after heavy selloffs in Europe.

The S&P 500 dropped 0.7% or 13 points to 1,933 while the Dow Jones Industrial Average dropped 0.5% or 78 points to 16,725 points. The Nasdaq Composite Index shed 0.7% or 32 points to 4,390.

US stocks dropped to the heels of European shares’ sharp declines while investors continued pulling back from the global markets’ risky corners. Traders noted that US government bonds, considered a safe haven, were not been crowded by investors.

Cuttone & Co. senior vice president, Keith Bliss was quoted by The Wall Street Journal as having said, “Yesterday was a classic rotation out of risky assets into riskless assets. But the 10-year yield has barely budged today.”

European stocks suffered a sharp decline after the rates were left unchanged by the European Central Bank and investors reported that the ECB was providing few details on plans to grow the balance sheet. There was a 2% drop in the Stoxx Europe 600. Investors are watching the ECB to take action to buttress the flagging recovery of eurozone. The central bank had announced unexpected cuts in interest rates in September.

Henderson Global Investors head of global securities, Matthew Beesley said, “Clearly people are looking for further stimulation of the economy by the ECB.”

According to USA Today, US stocks are being undermined by various unexpected concerns. California State University Channel Islands economics and finance professor, Sung Won Sohn said, “A lot of it is related to global and geopolitical uncertainties, from Russia to the Middle East to Ebola to Hong Kong. All these risks bunched up and hit at the same time.”

The Nikkei 225 index of Japan dropped 2.6%, Britain’s FTSE 100 dropped 1.7%, CAC 40 of France lost 2.8% and the DAX of Germany dropped 2%.

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To contact the reporter of the story: Jonathan Millet at john@forexminute.com