Big losses in US market

Persistent worries about the health of the Chinese economy renew worries

U.S. stocks sold off and closed near session lows on Thursday, 07 January 2016 as persistent worries about the health of the Chinese economy and a continued slide in commodity prices sent investors for cover. The sharply lower start to the day was brought on by renewed global growth concerns and worries about incoming deflationary pressures. A sharp decline in oil prices underscored these market concerns.

The Dow Jones Industrial Average dropped 392.41 points, or 2.3%, to 16,514.10. The Nasdaq Composite had the steepest declines, down 146.34 points, or 3%, at 4,689.43. The S&P 500 index fell 47.17 points, or 2.3%, to 1,943.09, with all 10 main sectors finishing with losses.

Technology and financials led the losses, falling 3.1% and 2.8% respectively. Twenty nine of Dow's 30 members ended in negative territory. Since the start of the year, the blue-chip index has lost more than 900 points, its worst start to the year ever. All three benchmarks are down nearly 10% from their peak levels in May 2015.

Global markets have been taking their cues from China all week and a halt in the China stock market, following a 7% fall in the Shanghai Composite Index and reports of the possibility of further devaluation of the yuan Thursday have frightened investors, with global equity markets plunging to multi-month lows. This is the second time this week that China's newly implemented circuit breakers have crossed over and infected the broader U.S. market.

Today's economic data included, Initial claims for the week ending January 2nd which decreased by 10,000 to 277,000. This was above the consensus estimate of 270,000 but within the 250,000 to 300,000 range that has persisted since July 2014. The prior week's claims level was unrevised. Continuing claims for the week ending December 26 were 2.230 million, an increase of 25,000 from the previous week's revised level of 2.205 million (from 2.198 million).

Among stocks under focus, Apple shares tumbled 4.2%, dropping below $100 after a Wall Street Journal report said the company has scaled back iPhone production. Yahoo slumped 6.2% after reports the Internet giant is set to cut at least 10% of its workforce.

Bullion prices ended substantially hiogher on Thursday, 7 January 2016 at Comex. Gold futures rallied on Thursday for a fifth session in a row, as global-market and geopolitical turmoil triggered more safe-haven buying. The precious metal was one of the few bright spots on a day when concerns over the Chinese economy pummeled equity markets and commodities around the world. Adding to this, tensions in the Middle East and uncertainty surrounding North Korea have prompted investors to buy the metal.

February gold climbed $15.90, or 1.5%, to settle at $1,107.80 an ounce on Comex. Prices had already posted gains in each of the last four sessions. March silver rallied along with gold, tacking on 36.8 cents, or 2.6%, to end at $14.344 an ounce.

Gold's gains on Thursday came as China's stock market tumbled on a currency devaluation that raised further questions about the world's No. 2 economy and fueled concerns over capital flight.

Gold is traditionally seen as a safe-haven asset, as it tends to maintain a stable level of value, and investors often buy gold during times of heightened social, political or economic uncertainty.

Crude oil futures settled with a loss for a fourth straight session on Thursday, 07 January 2016, as turmoil in China continued to raise the risk for a slowdown in energy demand from one of the world's top consumers.

On the New York Mercantile Exchange, February West Texas Intermediate crude shed 70 cents, or 2.1% to settle at $33.27 a barrel on the New York Mercantile Exchange. It traded as low as $32.10 but also tapped a high of $34.26. February Brent crude fell 48 cents, or 1.4%, to $33.75 on London's ICE Futures exchange. Prices settled Thursday at their lowest level since June 2004.

Moving to Treasuries, the benchmark note registered a slim gain after climbing off its intraday low. As a result, the 10-yr yield ticked down two basis points to 2.15%.

Investor participation was above average as 1.1 billion shares changed hands on the floor of the NYSE.

Tomorrow, the December nonfarm payrolls report (consensus 200k) will be released at 8:30 ET. While November wholesale inventories (consensus -0.1%) and November consumer credit (consensus $18.50 billion) will be reported at 10:00 ET and 15:00 ET, respectively.

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