The forces that crushed the Shanghai Composite by 8% and then major European indexes by 3% appear ready to spread to U.S. markets. A brutal open may be a sell-off of as much as 2.5%, based on Dow Jones Industrial Average and Nasdaq futures.
The question is whether the United States will hold the line with a recovery in stocks by noon, or whether the collapse will worsen.
On one side of the debate are the strength of the U.S. economy and the benefit of low oil prices. On the other are the effects of a weak economy in China and the fact that U.S. markets trade at high price-to-earnings (P/E) ratios. Certainly, the tech sector suffers from the P/E issues, as has been proven by the depth of the drop in these stocks last week.
While there is no evidence that this drop is anything like the one in 1987, it will be if shares collapse throughout the trading day.
ALSO READ: 5 Defensive High-Yield Stocks to Survive the Sell-Off Carnage
Sponsored: Want to Retire Early? Here’s a Great First Step
Want retirement to come a few years earlier than you’d planned? Orare you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
