From Barron's Read This Spike That column:
There are plenty of reasons for Thursday’s broad-based stock decline. Here’s a roundup of ideas.
Last week, the U.S. stock market took a big one-day hit because of a surprise devaluation of the Chinese yuan. But today’s big drop in stocks appears like it’s coming from many directions, including the U.S.The Dow Jones industrial average closed down 358 points, or 2.06% taking it to a close of below 17,000 for the first time since last October. The index has fallen 4.5% for 2015. The more tech-focused and riskier Nasdaq fell 2.8% on the day.A piece by CNNMoney does a decent job summing up the many reasons for the market’s big drop. While some articles simply point to the uncertain tone about the U.S. economy in the minutes of the July Federal Reserve’s rate-setting committee meeting, there’s clearly more going on.For example, the piece points out that oil fell to a new, six-and-a-half year low Thursday morning before rallying up in the afternoon. “Not only is there an excess of oil globally, but China’s slowdown is driving a collapse in commodity prices. It has hurt many countries whose economies are based on oil, metals and agriculture,” writes CNNMoney. “The commodity bust is bad news for the economic outlook for several countries and the American companies that do business there.”A piece by Yahoo Finance columnist Michael Santoli discusses the overall investor climate that has contributed to today’s big selloff.A long-time student of stock-market behavior, Santoli writes that “the August Wall Street vacation evacuation is well underway, markets are facing an absence of inflation, huge air pockets underneath commodities and emerging-market currencies — and a vexing lack of clarity about what the Fed might do in less than a month’s time. The collective response to this environment devoid of strong conviction has been to pull cash out of riskier markets and wait.”...MORE
Also at Barron's:
ZeroHedge on the other hand is noticeably lacking the Barron's SangFroid:
VIX Explodes To February Highs, Term Structure Inverts
S&P 500 -1,998.51 Down 37.22 (1.83%)
DJIA - 16,693.68 Down 297.01 (1.75%)
