US hammered after earlier rally in trading - New York Report

A STRONG rally on Wall Street evaporated and turned into losses yesterday, as concerns about China’s economy heavily outweighed lower valuations that some investors earlier saw as bargains.

The Dow Jones industrial average fell 204.91 points, or 1.29 per cent, to 15,666.44, the S&P 500 lost 25.59 points, or 1.35 per cent, to 1,867.62 and the Nasdaq Composite dropped 19.76 points, or 0.44 per cent, to 4,506.49.

The dollar also gave up much of its gains from earlier in the day.

Global stocks, oil and currencies initially appeared to recover after markets were pummelled on Monday when Chinese shares fell almost nine per cent.

Beijing heeded investor calls for intervention after the Shanghai Composite Index slumped again yesterday, but the index still ended down 7.6 per cent.

After Monday’s Wall Street selloff – its steepest in four years – some investors bought on the dip. But others did not want to hold stocks overnight for fear of bad news from China.

“You didn’t have the snap back you would have expected to reverse a move like yesterday’s. People are still nervous about overseas and what might happen tonight. Nobody wants to sit around and see what happens,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “Our fundamentals are not nearly as bad as those in China, so it would be logical to see us rally. But we’re still beholden to events in China.”