US stocks sunk on Tuesday as investors across the world fled risky assets and Wall Street feared that weak housing figures could pave the way for even more disappointing economic data.
The S&P 500 closed down 1.5 per cent to 1,057.43, the Dow Jones Industrial Average fell 1.3 per cent to close at 10,040.45 and the Nasdaq Composite was lower by 1.7 per cent to close at 2,123.76.
Eight of the 10 main sectors of the S&P 500 fell in a broad-based sell-off, with seven down more than 1 per cent.
Existing home sales in July dropped more than expected. The S&P 500 housebuilders index was only down 0.1 per cent after a Citigroup analyst said they may be a good investment in the longer term. But the wider market was still shaken by the drop in sales.
Ryan Detrick, senior strategist at Schaeffer’s Investment Research, said that the housing data could signal a double-dip but that there was other data, including manufacturing, which were not indicating a return to recession.
However, he added: “The overall sentiment is getting very negative here and rightly so as we see things quickly deteriorating on the economic front. That’s how short-term violent bottoms can form.”
Investors were unimpressed by data from the Richmond Federal Reserve’s manufacturing index, which was better than expected but still showed a fall in industrial activity.
Instead, they turned their attention to a possible revision to the second-quarter GDP figure, due to be released on Friday.
Most economists are predicting that GDP, which was reported to have risen 2.4 per cent, will be revised down to about 1.4 per cent. LINK
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