Wall Street and the world markets were taken on a stomach-churning Chinese rollercoaster ride Monday that began with a market meltdown for the ages.
The Dow Jones industrial average, which had never lost more than 800 points in a day, plunged nearly 1,100 points on fears that the Chinese economy was faltering.
By the close of trading, the Dow finished down 588 points after one of the most volatile days of trading ever. The S&P and Nasdaq both declined 4% after also paring huge early losses.
A massive, 8.5% collapse of Chinese shares — dubbed “Black Monday” by the country’s state media — wiped away billions in gains while causing markets to crash in Europe and other Asian countries.
Wall Street, however, was able to stage a dramatic comeback thanks in great measure to a timely announcement by Apple honcho Tim Cook.
Investors began buying up Apple shares after Cook announced they had experienced “strong growth” in China in July and August. He noted that iPhone activations in China jumped in recent weeks and their app stores there had their best performance of year for over the past two weeks.
“The Cook email today was a huge sigh of relief for investors as the major fuel in Apple’s growth story for years to come is around China,” Daniel Ives, senior analysts at FBR Capital Markets, told the Daily News.
“Cook helped calm Wall Street fears. We believe China growth fears at Apple are overblown and Cook gave the bulls — and the overall market — something to hang their hats on.”
The White House downplayed worries that Monday’s market mayhem might be a precursor to more chaos.
“There is no doubt the global economy is more interconnected that it ever has been,” spokesman Josh Earnest said. “What I would encourage people to evaluate is the ongoing strength and resilience of the U.S. economy.”
Gus Faucher, senior economist at PNC Financial Services Group, told The News he doesn’t “think that the slowdown in China presents a serious threat to U.S. economic growth.”
U.S. exports to China make up just 1% of gross domestic product and the recent devaluation of the Chinese currency should take less than 0.1% off of U.S. growth over the next year, Faucher said.
Worries that China’s economy, the world’s second largest, was losing steam helped start a five-day stock market slide last week.
This happened after the country’s central bank devalued its currency on Aug. 11 to make its export prices cheaper.
Since then, global equity markets have lost more than $5 trillion in value.
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With News Wire Services
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