S&P 500 negative for year; stocks plunge as yuan extends slide

finance.yahoo.com

By Evelyn Cheng 

 

U.S. stocks quickly fell more than 1 percent on Wednesday as a second day of decline in the yuan against the dollar increased concerns about global growth.

 

The Dow Jones industrial average fell more than 250 points, extending Tuesday's 212-point loss. The Nasdaq Composite fell 1.5 percent as Apple and biotechs continued to decline sharply. 

 

The S&P 500 fell more than 1 percent into negative territory for the year and broke a support level, trading near 2,055 as of 10:31 a.m.

 

"It's still a reaction to the Chinese yuan and the fear that many individual stocks are in oversold territory. The pressure will be on the overall stocks to hold 2,060/2,065 on the SPX cash," said JJ Kinahan, chief strategist at TD Ameritrade. 

 

More than half of the stocks in the S&P 500 are trading in correction territory. 

The People's Bank of China set the yuan fixing at 6.3306 against the U.S. dollar on Wednesday, 1.6 percent weaker than the previous day's level.

 

The move signaled Beijing's new commitment to set the daily fixings according to the previous day's closing spot prices and market-moves of other major currencies. 

The yuan (Exchange:CNY=) extended losses, dipping to 6.42 per dollar, its weakest level in four years, fueling expectations of more sustained weakness and a feared "currency war"-where countries artificially weaken their currencies to gain a competitive advantage.

The currency jumped 1 percent towards the end of the session as China intervened in the foreign exchange markets in final minutes of trading to prevent an excessive fall in the value of the yuan, The Wall Street Journal reported Wednesday. 

Alibaba (BABA) plunged to a post-IPO low, falling as much as 7.9 percent after the China-based e-commerce giant missed on revenue and posted the slowest growth in more than three years. However, adjusted quarterly profit was 59 cents per share, 1 cent above estimates.

"We closely monitor the Chinese economy and the impact on our Chinese consumer's behavior but what we observe that consumers are still coming to our retail platforms to do the shopping because of the lifestyle change so we are confident for our long term growth," Daniel Zhang , CEO of Alibaba Group, said on CNBC's " Squawk on the Street ."

Macy's (NYSE:M) also plunged more than 4.5 percent after reporting earnings that missed on both the top and bottom line. The retailer also lowered its forecast.

U.S. stocks closed lower by about 1 percent on Tuesday after an unexpected move overnight by the People's Bank of China to depreciate the yuan by nearly 2 percent. The Dow Jones industrial average closed about 210 points lower, wiping out most of Monday's gains. The index's 50-day moving average fell below its 200-day moving average, a bearish condition many analysts term a "death cross ." 

 

Federal Reserve policies can benefit U.S. labor markets but cannot alone solve the so-called skills mismatch between workers and employers, New York Fed President William Dudley said in prepared remarks. 

 

U.S. job openings totaled 5.2 million in June, versus 5.3 million expected.

Treasury yields held lower, with the 10-year yield (U.S.:US10Y) at 2.09 percent and the 2-year yield (U.S.:US2Y) at 0.64 percent. 

The U.S. dollar fell 1 percent against major world currencies as the euro traded above $1.11.

 

Crude oil attempted to recover from Tuesday's six-year low, with crude up more than 1 percent at $43.67 in morning trade. Brent held above $49 a barrel.