US stocks are taking a hit at the start of the week as interest rates rise and gold is retreating. Many investors are looking for answers of two crucial questions – Is this a overreaction to the Feds statement of reducing stimulus program or is the economy showing signs of weakening.
The Dow Jones Industrial Average closed down 139.84 points, or 0.9%, the ninth triple-digit move in stock prices over the past 10 trading sessions. DJIA was down 248 points at its lowest level for the day. The slowing growth of the worlds second biggest economy is also adding to the mix. China is experiencing a shadow-banking scheme which is a self-induced pyramid lending.
Recently, long-term investors have stayed put amid uncertainty over whether the U.S. economy, and stocks in particular, can prove resilient to the stimulus measures, which help by adding $85 billion a month into the economy through bond purchases.
Recent indicators have pointed to steady growth, but its still too early to say how strong are those signals. On Monday, a reading on business activity among Texas-area manufacturers showed a sharp increase in June, and production there is at a two-year high. Unemployment rate is still higher than expected. This weeks jobless claims data could really shed light on how soon the Fed could start tapering the stimulus.
The S&P 500 stock index dropped 19.34 points, or 1.2%, with all 10 sectors sinking. The Nasdaq Composite Index fell 36.49 points, or 1.1%.
In corporate news, Vanguard Health Systems jumped 67.34% after the firm agreed to be acquired by Tenet Healthcare in a deal worth $1.63 billion.
Apple Inc. shares fell below $400 for the first time since April. Company recorded a daily loss of 2.65%. The increasing competition of the main products of Apple and their struggle to innovate and differentiate from the rest of the market has helped the decline.
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