Quantcast
Get breaking news alerts via email

Click here to manage your alerts
Trader David O''Day, left, works on the floor of the New York Stock Exchange, Friday, June 21, 2013. Global stock markets reeled Monday, June 24, 2013 with Shanghai's index enduring its biggest loss in four years, after China allowed commercial lending rates to soar in a move analysts said was aimed at curbing a booming underground lending industry. (AP Photo/Richard Drew)
China slump, higher bond yields weigh on markets
First Published Jun 24 2013 09:45 am • Last Updated Jun 24 2013 09:45 am

More signs of distress in China’s economy and rising U.S. bond yields caused a big drop in U.S. stocks on Monday.

The Dow Jones industrial average was down 180 points, or 1.2 percent, at 14,619 as of 10:50 a.m. It had been down as much as 247 points after the first hour of trading.

Join the Discussion
Post a Comment

Banks and basic materials companies led a broad decline in U.S. stocks as traders fretted over a 5 percent slump in China’s benchmark index and a tightening of lending in the world’s second-largest economy.

U.S. bond yields rose sharply, continuing a surge from last week when the Federal Reserve laid out a possible timetable for when it could end its massive bond-buying program.

The selling was broad-based: 98 percent of stocks in the Standard & Poor’s 500 index declined. The S&P 500 was down 24 points, or 1.5 percent, to 1,568. The S&P has fallen 6 percent from its record high of 1,669 reached on May 21.

The market is having its biggest pullback since last fall, when the S&P lost 7.4 percent between Oct. 17 and Nov. 15. That decline happened in the run-up to the November presidential election, when investors worried about a stalemate between the White House and Congress over the budget.

The market’s decline over the past month is still short of the 10 percent fall from a peak that market watchers refer to as a "correction."

Janet Engels, senior vice president and director of the private client research group at RBC Wealth Management, said the decline "probably has further to go."

The last time the U.S. stock market had a full-blown correction was July 22-Oct. 3, 2011, when the S&P 500 fell 18.3 percent. That fall was caused by concern that a fight between U.S. lawmakers over extending the debt ceiling would push the U.S. into default.

Since starting its bull run in March 2009, the S&P 500 has had six pullbacks and two corrections. So far, the market has come back stronger from each set back. The S&P is still up 131 percent during this four-year bull market.


story continues below
story continues below

Before Wall Street opened for trading on Monday, Asian markets were already sharply lower, led by a 5 percent plunge in China’s Shanghai Composite Index. That was the index’s biggest loss in four years. The decline was prompted by a government crackdown on off-balance sheet lending, which made investors worry about China’s economic growth.

The selling spread to Europe, but markets erased some of their early losses. France’s benchmark stock index was down 1.2 percent, Germany’s 0.9 percent.

In the U.S., the yield on the 10-year Treasury note jumped from 2.54 Friday to 2.61 percent, the highest level in almost two years. As recently as May 3, those yields were just 1.6 percent.

The rise in U.S. rates began after comments from the Federal Reserve last week that said the Fed’s bond-buying program could wrap up next year as long as economic conditions continue to improve. The Fed’s easy-money policies have made borrowing cheaper and boosted corporate balance sheets.

Investors have worried that higher U.S. interest rates will hurt homebuilding companies if steeper mortgage rates make it harder for people to buy homes. PulteGroup slumped 67 cents, or 3.6 percent, to $18.13.

The Nasdaq composite fell 42 points, or 1.2 percent, to 3,315.

Other stocks with big moves included:

— Tenet Healthcare rose $2.55, or almost 9 percent, to $45 after offering to buy Vanguard Health Systems Inc. for $1.8 billion. The offer of $21 per share pushed Vanguard stock up $8.09, or 64 percent, to $20.62.

— Facebook fell 82 cents, or 3.3 percent, to $23.71. Monday was the first full trading day after Facebook acknowledged it had accidentally exposed contact information for 6 million users to some other users.

———

AP Business Writer Steve Rothwell contributed.



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.