US stocks dropped significantly in Tuesday’s mid morning trading, tracing a slump in markets overseas on increasing concerns over declining global growth.
The Dow Jones Industrial Average dropped 0.9% or 151 points to 16,841 while the S&P 500 Index dropped 0.6% or 13 points to 1,952. The Nasdaq composite Index declined 0.8% or 34 points to 4,421, as reported by The Wall Street Journal.
The declines came after the retreat of European shares due to weak German data on industrial output, which raised fears that growth in the biggest economy of the continent would be minimal during Q3.
The IMF projects growth to stand at 3.8% in 2015, down from the earlier projection of 4%.
Raymond James’ director of institutional equity trading, Dan McMahon said, “Slowing growth in Europe has been the headline concern the last couple of weeks. That’s kind of where everybody’s been taking their lead.”
McMahon said that investors are selling stocks across the board in a bid to cut risks heading into Q4, instead of picking individual shares to unload. He added, “This moment is not a stock-pickers’ market.”
While the US economy has been doing well this year, investors are concerned about slowdowns from places such as Europe, Japan and China, which might spill into the US.
Voya Investment Management chief investment officer, Paul Zemsky said that he cut his risky assets’ holdings last week by selling the S&P 500 Index funds due to concerns that US stocks could be affected by the slowing global growth, as reported by ABC News.
Zemsky said, “It’s not a good environment to want to add to your positions. There’s a growth scare in the market right now and Germany kind of hit us over the head with that this morning.”
JPM Chase Private Bank global investment specialist, Ed Hyland said that the US economy is strong to maintain recovery despite signs of weak growth in overseas economies. Hyland said, “The US can stand alone. We’re pretty optimistic it will continue to grow even with the slowdown in Europe.”