U.S. stocks drop in midday trading on China growth worries

Sept 28 (Reuters) – USA stocks extended their losses in afternoon trading on Monday and were set for their worst third quarter in four years as investors anxious about the health of China’s economy and its potential impact on the timing of a US interest rate increase.


Many technology stocks suffered drops, including Amazon (-3.7 per cent), Facebook (-3.6 per cent) and Netflix (-2.7 per cent).

The FTSEuroFirst (.FTEU3) index of 300 leading European shares closed down 2.2 percent.

USA stocks fell Monday with the Dow Jones industrial average sinking more than 300 points, as raw-material and energy shares retreated at more signs of an economic slowdown in China. Federal Reserve Bank of New York President William Dudley said in an interview with The Wall Street Journal that he expects policy makers to raise rates this year.

The S&P 500’s fall was its biggest daily percentage drop since September 1. In a note, Investec Securities said mining companies “gorged themselves on cheap debt” in a race to grow production following the Chinese stimulus in the wake of the global financial crisis and that Glencore could see all its equity value “evaporate” if major commodity prices stay at current levels.

The Nasdaq Composite dropped 85 points, or 1.8%, to 4,600 also was being dragged lower by a downdraft in the biotech sector.

The Federal Reserve held off from raising rates at its September meeting, citing concerns about the health of the global economy, notably China, among other factors.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.10 percent from 2.17 percent Friday, while the 30-year dropped to 2.88 percent from 2.96 percent.

CHINA, US OUTLOOK: Investors who worry China’s economic downturn might deepen were looking ahead to purchasing managers indexes due Thursday for manufacturing and service industries.

Personal consumption expenditure remained flat on a month-on-month basis, while it edged up from 1.2% to 1.3% compared with the same period in 2014.

Also higher was Media General, which vaulted 22.3 percent on news it received an unsolicited buyout offer from Nexstar Broadcasting Group valued at about $4.1 billion.

In commodity markets, Brent crude oil ended 2.6 per cent lower at $US47.34 a barrel.

The USA dollar strengthened to 120.48 yen while the euro gained slightly to $1.1170.

They claim Valeant increased the price of congestive heart failure treatment Nitropress and another heart drug, Isuprel, by 212 and 525 per cent respectively on the day it purchased the rights to them from Marathon Pharmaceuticals.


Even gold, often considered a safe haven for investors, took a beating, with the December contract falling $13.90 to US$1,131.70 an ounce.

Asia shares held back by insipid Wall Street, dollar consolidates