(As of 7:10 am PST)
Stocks are in recovery mode
today after suffering one of the worst days of the year yesterday. The Dow
ended down 470 points (-2.8%) while the S&P500 and Nasdaq shed -3.0% and
-2.9% respectively as fears over China dragged the major indexes to their third
largest daily drop of the year. Today’s “dip-buying” may be just that – a short
term bounce from early money buying some oversold securities yesterday. No
major economic news would otherwise indicate a sustained turnaround. Data is
light but mostly positive today. Payroll processor, ADP reported early today
that the private sector added 190,000 jobs in August – a strong number, but
slightly less than the consensus estimate of 201,000. Of course, Friday’s Labor
Department non-farm payrolls report will provide a more reliable picture of
private sector job growth in August. An upward revision to productivity in the
second quarter provided some optimism this morning, as productivity was revised
from an initial reading of 1.3% to 3.3%, better than the 2.8% expected.
Overseas, Asian markets finished the day mostly down, with China’s Shanghai
index rebounding from down 4.6% at one point to finish the day nearly flat.
China’s stock market will be closed tomorrow and Friday for holiday, which may
provide some respite for markets which have been whipsawed by the Chinese
volatility as of late. European markets are higher on the day. Gold is flat
this morning while oil is down slightly to $45 per barrel. Interest rates and the US
dollar are trading up today. Whether or not today’s rally can sustain itself
remains to be seen.
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