Will Tuesday's Stock Market Carnage Already Be Forgotten About on Thursday?

Tuesday’s major U.S. stock market selling went from bad to worse as buyers were merely absent ahead of the rare mid-week closure of the U.S. financial markets as a day of mourning for President George H.W. Bush. One problem with Tuesday’s sell-off is that the news behind the drop was seemingly not enough on the surface to merit such a strong decline. Trading volumes in the key stocks were also not generally representative of a widespread panic either. And to make matters worse, this created what chartists would think of as technical damage by wiping out all of Monday’s gains and then a lot more.

24/7 Wall St. took a snapshot of the changes seen in U.S. markets and the follow-on selling that might have been expected in the international markets just simply did not mirroring the drop in the U.S. markets. This could be one of those instances when the markets simply got ahead of themselves at a time when no buyers were willing to take on more risk.

The drop in market prices was tied to mixed economic readings, more slowing in housing, some doubts about a real deal happening with China during the 90-day extension, and some bad news from the United Kingdom about the legitimacy of Brexit. And the very stable Dollar General Corp. (NYSE: DG) sold off handily after earnings.

Here were Tuesday’s top closing bell levels for the major equity and fixed income markets, shown with point and percentage drops:

  • S&P 500 closed at 2,700.06, down 90.31 for a 3.24% drop.
  • The Dow Jones Industrial Average closed down at 25,027.07, a drop of 799.36 or 3.10%.
  • The Nasdaq Composite closed at 7,158.43, a loss of 283.09 points or 3.80%.
  • The Russell 2000 closed down at 1,480.75, a drop of 68.21 points for a 4.40%
  • The yield on the 10-year Treasury Note closed almost seven basis points lower at 2.924%.

But if we look at some of the international plays on Tuesday, the drop just wasn’t as much. Canada’s S&P/TSX Composite Index closed down 1.4%, after falling 211.39 points to 15,063.59. And the iShares China Large-Cap ETF (NYSEARCA: FXI) closed down just 1.48% ($0.63) at $42.02 on Tuesday. If the trade deal really already was crumbling, it would be showing up in that ETF in a way that would probably be worse for it than it would be for the U.S. major equity indexes.

In mid-morning hours in the United States, again with U.S. markets closed on Wednesday, the overseas markets just did not mirror the same major drop seen in the U.S. markets on Tuesday. Here is how some of the major markets were looking, with some already closed and some about to close later on Wednesday:

  • The United Kingdom’s FTSE 100 was down 77.72 at 6,945.04, for only a 1.1% drop.
  • Germany’s DAX was down 85.31 points, or just 0.76%, at 11,249.35.
  • Japan’s Nikkei 225 closed down 116.72 at 21,919.33, for a drop of a mere 0.53%.
  • Hong Kong’s Hang Seng Index closed down 440.76 at 26,819.68, a loss of 1.62%.
  • And the Shanghai SSE Composite Index tracking Mainland China was down just 0.6%, after falling 16.15 points to 2,649.81.

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