US stocks fall after China sell-off shakes markets

NEW YORK: US stocks fell on Monday as a sharp Chinese equity sell-off added to concerns about the global economic prospects of recovery from a steep recession. The Dow Jones Industrial Average dropped 47.92 points (0.50 percent) to 9,496.28, closing lower for the second straight session. The tech-rich Nasdaq composite skidded 19.71 points (0.97 percent) to 2,009,06 and the broad-market Standard & Poor's 500 index fell 8.31 points (0.81 percent) to 1,020.62. "Widespread losses in foreign markets, which were led by a 6.7 percent decline in the Shanghai Composite, have prompted valuation concerns that are interfering with the bullish sentiment," Patrick O'Hare of Briefing.com said. "We suspect the understanding that September has been the weakest month historically for the stock market hasn't been lost on participants either," he added. The major indices posted full-month gains in August, nevertheless, with the blue-chip Dow adding 3.54 percent. The Nasdaq was up 1.54 percent and the S&P advanced 3.36 percent, the sixth time in as many months the two indices had climbed. Wall Street stocks followed major European and Asian markets lower after the Shanghai Composite index plunged 6.7 percent, its biggest one-day drop since June 2008, amid concerns over slowing lending growth and a new share supply glut, dealers said. The Shanghai sell-off stoked worries over Chinese demand growth, driving crude oil prices sharply lower. "We are keeping a close eye on the global equity markets, expecting to see the pullback that has been in place in China for the last four weeks to possibly intensify and spill over into other global markets, including New York, as traders finally begin harvesting some trading profits generated over the last six months," said Fred Dickson of DA Davidson & Co. A historic victory by the Democratic Party of Japan on Sunday that ended more than half a century of almost unbroken conservative rule raised uncertainty about the direction of the world's second-largest economy. In the US, the Institute of Supply Management-Chicago purchasing managers index rose to 50.0, the break-even point between growth and contraction, from 43.4 in July. Wall Street had two big mergers to digest on the final day of August that kicks off a week heading into a long holiday weekend. The Walt Disney Co. announced it had agreed to buy Marvel Entertainment Inc., whose stable of characters includes "Spider-Man," "Iron Man" and the "X-Men," in a stock and cash deal valued at four billion dollars. Disney fell 2.98 percent to 26.04 dollars and Marvel Entertainment soared 25.15 percent to 48.37 dollars. Oilfield services giant Baker Hughes plummeted 9.56 percent to 34.45 dollars after announcing it had agreed to buy rival BJ Services in a cash-and-stock deal worth 5.5 billion dollars. BJ Services leapt 4.08 percent to 16.06 dollars. Among stocks in focus, Caterpillar, sometimes seen as a bellwether of construction activity, dropped 3.00 percent to 45.31 dollars. Aerospace giant Boeing skidded 2.68 percent to 49.67 dollars and aluminium maker Alcoa tumbled 3.60 percent to 12.05 dollars. Bonds rose. The yield on the 10-year US Treasury bond fell to 3.401 percent from 3.451 percent on Friday and that on the 30-year bond advanced to 4.181 percent from 4.208 percent. Bond yields and prices move in opposite directions. - AFP/de