U.S. stocks reverse in last hour; Dow falls 205 points

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Richard Drew/ AP Photo

Traders Fred DeMarco, left, and Kevin Lodewick, right, work on the floor of the New York Stock Exchange, Tuesday, Aug. 25, 2015. U.S. stocks jumped at the open after China’s central bank cut interest rates to support its economy.

Published Tuesday, Aug. 25, 2015|1:28 p.m.

Updated Tuesday, Aug. 25, 2015|3:41 p.m.

Simply when it appeared the bleeding had stopped, it started up once again.

A rally in U.S. stocks vaporized in the minutes prior to the closing bell Tuesday, sending out the Dow Jones industrial average down more than 200 points and extending Wall Street’s losing streak to six days– the longest such stretch in more than 3 years.

Where the marketplace may bottom out is anyone’s guess– not precisely comforting news to anybody whose retirement cost savings or down payment on a house are bound in stocks.

The rally followed China brought down interest rates to aim to boost its slowing economy. Other world markets surged on the news out of Beijing, and for a while, it looked as if U.S. stocks would do the same and the global sell-off may stop.

Stocks also got a lift from economic reports showing a rebound in U.S. customer confidence and sales of new American houses.

At one point Tuesday, the Dow was up as much as 441 points. But sell orders began gathering in the last 15 minutes of trading, and stocks swung abruptly from positive to unfavorable territory.

The Dow ended with a loss of 204.91 points, or 1.3 percent, at 15,666.44. The Requirement & & Poor’s 500 index fell 25.60 points, or 1.4 percent, to 1,867.61. The Nasdaq composite decreased 19.76 points, or 0.4 percent, to 4,506.49.

“The return to a more standard stimulus from China assisted thrill lots of financiers,” said Jeff Kleintop, primary global investment strategist at Charles Schwab. “But, in reality, this is most likely the start of a longer-term duration of volatility.”

The three major U.S. indexes have now lost ground six days in a row, with the Dow falling about 1,900 points over that period.

The S&P 500 is down 12 percent from its record close of 2,130.82 on May 21. That puts it in exactly what Wall Street calls a “correction”– a drop of at least 10 percent from its newest high. It is the S&P’s very first correction in nearly 4 years.

The last time the S&P declined 6 days straight was July 2012.

China, the world’s second-largest economy, cut its rate of interest for the 5th time in 9 months in a restored effort to bolster growth. The reserve bank likewise increased the amount of cash readily available for lending by minimizing the reserves banks are needed to hold.

A slowdown in China has the possible to substantially crimp demand for oil and other products, a causal sequence that might dampen worldwide economic growth.

“The Chinese economy is going to be on this bumpy roadway for a while, and it will have ebbs and flows that will certainly no doubt have a major impact on the worldwide economy,” said Kamel Mellahi, professor at the Warwick Business School. “What we are seeing now is a gown rehearsal of things to come.”

Beyond China, traders are awaiting quality from the Federal Reserve, which has actually indicated it might begin raising its key interest rate from near zero for the very first time in almost a years as early as this year. The Fed isn’t really anticipated to provide a policy update until it wraps up a meeting of policymakers in mid-September.

European markets recovered practically all their losses from Monday’s sell-off. Germany’s DAX jumped 5 percent, while France’s CAC-40 increased 4.1 percent. The FTSE 100 index of leading British shares acquired 3.1 percent.

China’s reserve bank did something about it hours after the country’s primary stock index closed greatly lower for a fourth day. The Shanghai stock index slumped 7.6 percent, on top of Monday’s 8.5 percent loss.

Tokyo’s Nikkei 225 likewise closed lower, moving 4 percent. However other markets in Asia posted modest recoveries, including Hong Kong and Sydney.

Energy company Pepco Holdings declined one of the most in the S&P 500 on Tuesday after regulatory authorities in Washington rejected its proposed merger with Exelon. Pepco stock shed $4.44, or 16.5 percent, to $22.51.

Finest Buy tape-recorded the greatest gain in the index, climbing $3.68, or 12.6 percent, to $32.95, after the home electronic devices chain reported better-than-expected outcomes for the quarter.

Oil rebounded from its lowest closing level in more than six years. The rate of U.S. crude rose $1.07, or 2.8 percent, to $39.31.

U.S. federal government bond costs fell, pushing up the yield on the 10-year Treasury note to 2.07 percent.

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