Major indexes in the U.S. started Wednesday with steep losses, as investors sold shares in Tiffany, YUM! Brands and other companies with significant sales in China. By the afternoon the worst of it was over, and the broader market spent the rest of the day climbing back to where it started.
NEW YORK (AP) — Another drop in China’s currency shook markets around the world for a second straight day amid rising concerns about the world’s second-largest economy. Major markets in Europe slumped, while the U.S. stock market recovered from an early drop to finish nearly flat.
China’s central bank let its currency fall again on Wednesday, following a surprising devaluation the day before. The move jolted markets in Europe, home to big companies that rely on China’s growing middle class to buy their products.
Major indexes in the U.S. started the day with steep losses, as investors sold shares in Tiffany, YUM! Brands and other companies with significant sales in China. By the afternoon the worst of it was over, and the broader market spent the rest of the day climbing back to where it started.
“Clearly, emotions are running high today,” said Jack Ablin, chief investment officer at BMO Private Bank. Ablin said the market’s sudden turns reflect the uncertainty surrounding China’s actions. “It’s really about a fear of the unknown,” he said.
The Standard & Poor’s 500 index finished with a gain of 1.98 points, or 0.1 percent, at 2,086.05.
The Dow Jones industrial average lost 0.33 of a point to close at 17,402.51, while the Nasdaq composite inched up 7.60 points, or 0.2 percent, to 5,044.39.
China’s government said its moves were attempts to make the country’s exchange rate more responsive to the market. But a weaker yuan also benefits China by making exports cheaper to overseas customers. Many investors considered the devaluation a sign that China’s economy is in worse shape than official reports suggest.
“There’s a lot of uncertainty right now,” said David Joy, chief market strategist for Ameriprise Financial. “What does this tell us about how weak their economy is? And is this going to spread their weakness to other countries?”
The news from China battered European markets for a second day running. Germany’s DAX dropped 3.3 percent, France’s CAC 40 dropped 3.4 percent, while Britain’s FTSE 100 lost 1.4 percent.
In Asia, Japan’s Nikkei 225 fell 1.6 percent and Australia’s S&P/ASX 200 fell 1.7 percent. Hong Kong’s Hang Seng lost 2.4 percent, and the Shanghai Composite Index lost 1.1 percent.
Back in the U.S., Alibaba Group slumped after posting sales that fell short of Wall Street’s high expectations, even though first-quarter income for China’s top Internet retailer more than doubled. Alibaba dropped $3.96, or 5.1 percent, to $73.38.
Macy’s reported a drop in quarterly profits and sales on Wednesday as the department-store chain’s results were hobbled by delayed deliveries and a strong dollar. The company also cut its sales forecast for the rest of the year. Macy’s lost $3.42, or 5.1 percent, to $64.11.
In other markets, U.S. government bond prices edged down, nudging the yield on the 10-year Treasury to 2.15 percent from 2.14 percent the day before. The dollar slipped to $1.1161 for every euro and weakened to 124.22 Japanese yen.
Precious and industrial metals ended broadly higher. Gold added $15.90 to $1,123.60 an ounce, silver added 19 cents to $15.48 an ounce and copper crept up two cents to $2.35 a pound.
Crude oil rose 22 cents to close at $43.30 a barrel, bouncing off a six-year low reached the previous day. Brent crude, an international benchmark, added 48 cents to close at $49.66 in London.
In other futures trading on the NYMEX:
– Wholesale gasoline rose 7 cents to close at $1.764 a gallon.
– Heating oil rose 2.4 cents to close at $1.587 a gallon.
– Natural gas rose 8.7 cents to close at $2.931 per 1,000 cubic feet.