Towards next week, attention will be shifted to the Rocky Mountains, as policy makers will be gathering there from August 27-29 for the Fed’s conference of central bankers, finance ministers, academics and financial market participants in Jackson Hole.
World stock markets around the world plummeted on growth fears, recording their worst week of the year.
The Dow Jones industrial average fell 530 points on Friday, one day after another brutal sell-off. The index dropped 5.8% on a weekly basis, the steepest decline since September 2011. At its lowest point, the S&P was 7.7 percent off its peak. Wall Street was expected to open firmly in red again later having already lost more than 2.5 percent this week. Shares came under fresh pressure in afternoon trade as the U.S. oil benchmark slid below $40 a barrel for the first time since February 2009 in response to global-demand concerns and a persistent supply glut.
Dow component Apple’s (AAPL.O) shares resumed their fall and decreased 1.2 percent to $111.31 in premarket trading, a day after a Gartner report on China’s slowing smartphone sales. A year ago a barrel of oil was about $100.
The price of oil has fallen for eight consecutive weeks, the longest streak since 1986.
The uncertainty from the minutes – along with China – was a one-two punch that drove the markets down further.
Some analysts said the market’s dip this week does not necessarily signal that stocks are entering long-term decline.
“You kind of have a mini-correction”, said John Canally, an economist at LPL Financial.
That’s unwelcome news for anyone with a 401(k) invested in stocks. Strong employment numbers and other economic indicators suggest that the U.S. economy remains resilient. “That’s healthy. It means people are paying attention”.
“Some people will now be starting to be thinking about a bear market, but I think it’s a bit early to be talking about that but it will certainly be in a few headlines”, Mr. Williamson said.
Investors are also concerned about predictions that the U.S. Federal Reserve Board will raise a key interest rate as early as September.
The picture is complicated by the fact that global central banks have done pretty much all they can to boost growth during the crisis years, and the US and UK are now considering when to start raising interest rates. “It’s only because it’s been so calm that this looks so unusual”. The S&P 500 lost 64.84 points to 1,970.89, also taking it back to levels of last October. Japan’s Nikkei declined 2.9 percent, for a weekly loss of 5.2 percent.
For U.S. investors, the sudden sell-off that hit this week is likely another bump in the road, Zirin said, a short stretch when investors’ worries about the global economy bubble over. The United States is churning out oil at a rate not seen in decades.
“With more Chinese-led carnage on the markets today, only the very courageous are venturing into equities as buying stocks is now like catching falling knives”, said Mike McCudden, head of derivatives at stockbroker Interactive Investor.
The benchmark Shanghai Composite Index tumbled by 11.54 percent during the past week, despite a series of supportive measures to prop up the market.