On Tuesday, US stocks, which appeared to be surging last week to record highs, dropped as investors weighed the downbeat report on the economy of Europe and a move by the United States government to prevent companies from going abroad to get tax benefits.
The Wall Street Journal reported that the Dow Jones Industrial Average dropped 0.3% or 50 points to 17,122 while the S&P index dropped 0.2% or 4 points to 1,990. The Nasdaq composite gained 0.1% or 2 points to 4530.
Stocks extended their declines when the Dow dropped its winning streak of five days. The Dow dropped 0.6% to 17,172.68 while the S&P 500 slid 0.8% to 1,994.29 after an announcement by the financial minister of China that major changes to economic stimulus of the country are not likely.
US stocks dropped after a fall in European shares after the September gauge of activity in the services and manufacturing sectors of the eurozone dropped to the lowest this year.
Cuttone & Co. senior vice president said, “People are certainly nervous about China and Europe. But they’re afraid to sell and miss a rebound.” He added that there was a mute in trading volumes, an indication that investors are not ready to get out of the stock market.
USA Today reported that all looked well for investors of stock last week when the market avoided several major risks. Alibaba, the Chinese e-commerce giant performed well on the first day of trading on Friday, with a rally of 38%.
The Stoxx Europe 600 index dropped 1.4%, CAC 40 of France dropped 1.9% and DAX Index of Germany dropped 1.6%.
Federated Investors chief equity strategist, Phil Orlando said, “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?”
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