US stocks rallied late in the afternoon to end mostly flat recovering from a second day of losses as China’s devaluation of its currency continued to send shockwaves throughout the global indexes.
The Dow Jones Industrial Average ended virtually flat closing down 0.33 points at 17,402,51 after falling by as many as 277 points in earlier trading.
The S&P 500 staged its biggest comeback this year to end up 1.98 points or 0.1% at 2,086.25 after falling into the negative for the year earlier with a 32 point decline.
The tech heavy Nasdaq Composite ended up 7.60 points or 0.2% after falling by as many as 91 points in early morning trading.
“In a world where the 10-year [yield] is roughly at 2% and interest rates globally are for the most part well below that, it’s not a bad return if you can get 5% to 10% out of stocks overall over the next year,” Doug Foreman, chief investment officer at Kayne Anderson Rudnick Investment Management, told the Wall street Journal.
“That’s still the case despite the turbulence we’re seeing here this week,” he added.
The People Bank of China, the country’s central bank, announced that it had devalued the Yuan on lower than expected import and export data in a move they called ‘letting the market decide the value of the currency’.
The effects of the move spilled over to most of the global markets as the country is one of the biggest importer of goods and buyer of services in the world.
Traders in the US sold telecommunications and financial stocks in a brisk trading session on worries over the world’s second largest economy after the currency devaluation.
Most experts, however, expect the global economy to continue expanding despite signs of il health in China and, in a low interest rate environment, this is bullish for the stocks.
“China is a huge wild card both in terms of the rate at which it’s slowing but also how the leadership is handling it,” Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham,” Alabama, told Reuters.
“The reversal today is bullish … at least in the short term.”
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