U.S. stocks went on a roller-coaster ride last week
Adam Shell and Kim Hjelmgaard 1:28 p.m. EDT September 29, 2014
U.S. stocks opened sharply lower Monday on worries over pro-democracy protests in Hong Kong. The Hang Sang Index is down nearly 2%, falling to its worst level since July. Newslook
Pro-democracy protests in Hong Kong are spooking Wall Street Monday, as U.S. stocks continued their recent run of volatility, with the Dow dropping triple digits in early trading, tracking the nearly 2% drop overnight in Hong Kong amid concerns over China’s move to limit reforms in the Asian financial hub.
Stocks pared early losses and were off their lows in afternoon trading. The Dow Jones industrial average was down about 75 points, or 0.4%, to 17,040 after being down more than 170 points in early trading.
The Standard & Poor’s 500 index dropped 0.4% and the Nasdaq composite index fell 0.3%, but both of those indexes were also well off their lows of the session.
The Hong Kong protest is the latest geopolitical flare-up to get Wall Street’s attention, and cause investors to pare back their risk-taking. U.S. stocks went on a roller-coaster ride last week and has been dogged by global uncertainty in Iraq, Syria and the Ukraine. The stock market has also been victimized by profit-taking in recent days as investors react to a market that hit fresh record highs a little more than a week ago, but which has since seen the market’s upward momentum stall.
The protests in Hong Kong drew a tough response from police who declared them “illegal” and used tear gas after pepper spray and warnings of greater force failed to disperse demonstrators trying to join a sit-in outside the government headquarters.
Hong Kong democracy protesters defy calls to disperse
Hong Kong’s Hang Seng index fell 449.20 points, or 1.9%, to 23,229.21. Stocks in mainland China, however, were slightly higher, with the Shanghai composite index up 0.4%. Asian stock markets were mixed elsewhere as Japan’s Nikkei 225 index rose 0.5% to 16,310.64.
The stock market, which had been a sea of calm, has suddenly turned into a scary roller-coaster ride.The Dow opened down more than 100 points today, extending its string of price moves of 100 points or more to a sixth session.
The market has been extremely volatile in the past week or so, and investors were rattled to start the week by the demonstrations in Hong Kong that began Sunday and had investors wondering if a repeat of the Tiananmen Square protests in spring 1989 was brewing.
VOLATILITY: New normal? Dow dips of 100-plus points
FLASHBACK: ’89 Tiananmen Sq. protest did not sink U.S. stocks
It is important to note that U.S. stocks were not upended by the high-profile street protests back in Beijing back in 1989. In fact the index rose 8% from the unofficial start of the Tiananmen Square uprising on April 15, 1989, until June 4, 1989, the day the government crackdown intensified and resulted in deaths, USA TODAY research shows.
If the Dow finishes down — or up — by more than 100 points today, it will mark the first triple-digit point move of six days or more since an eight-session streak from June 11 to June 20 of 2013. That decline was exacerbated by a so-called “taper tantrum,” as U.S. investors reacted negatively to the earliest hints that the Federal Reserve would begin to pare back its bond-buying program. The Fed started to pull back on asset purchases this January and are slated to phase out quantitative easing, or QE, next month.
The Hong Kong Stock Exchange is the fifth largest in the world, when measured by the market value of the companies listed on the exchange, according to the World Federation of Exchanges, citing data through the end of August. (WFE data does not include the London Stock Exchange.) The Hong Kong exchange has a market cap of $3.4 trillion. Only the New York Stock Exchange ($19.3 trillion), the Nasdaq Stock Market ($6.8 trillion), and the Japan Exchange Group and Euronext are bigger.
European shares were trading lower as Germany’s DAX index dropped 0.7% and France’s CAC 40 fell 0.8%. Britain’s FTSE index was only down 0.04%.
Friday, stocks rallied as traders reacted to news of the fastest economic growth since 2011 as the final reading on gross domestic product for the second quarter was revised up to 4.6% from the previous estimate of 4.2%.