Stocks are experiencing a global meltdown as the first day of trading in 2016 gets underway.
China’s Shanghai composite got the ball rolling with a 6.9 percent decline, prompting steep declines in Europe and on Wall Street.
U.S. markets are having their worst first day of trading in 84 years. Not since 1932 has the Dow declined so much for an opening day, as the average fell more than 420 points in the midday session to 17,002. The S&P 500 slid more than 2 percent to 1,997 and the Nasdaq was hit the worst, as it was losing 2.8 percent to trade near 4,869.
Crude oil, which had opened higher as a result of escalating Middle East tensions, fell back to $36 a barrel but gold continued to shine as a safe haven and rose more than 1 percent to $1,071 an ounce.
The worst declining sectors included financials, down by 2.9 percent, followed by technology down 2.8 percent, and consumer discretionary, losing 2.7 percent.
Alibaba plunged more than 6 percent to $75.74 over concerns about the Chinese economy slowing down. It was new manufacturing surveys out of China that reignited the economic worries. The selling was so bad that authorities halted trading for the rest of the day. Today was also the day that China’s yuan could begin extended currency trading, and it quickly hit its lowest level in more than four years.
There were some U.S. companies that managed to buck the trend.
Lululemon Athletic Inc. traded higher by 6 percent to $55.80 following an upgrade by Wells Fargo analysts. The upgrade to outperform from market perform was based on the thesis that Lululemon has made improvements to its supply chain and they expect fewer markdowns. The analyst believes that the improvement in the supply chain will improve the quality control of the product and lessen production delays.
Ascena Retail Group jumped by more than 3 percent to $10.18 and Gap Inc. rose by more than 1 percent to $24.87.
But most stocks are losing ground.
Amazon.com is tumbling more than 5 percent to $640 after being downgraded from “buy” to “neutral” by analysts at Monness Crespi Hardt. Amazon reported a record-breaking holiday season and it was that success that worried the analysts. They basically don’t believe the company can keep up that kind of momentum. They suggested that even “winners need to take breathers” in the ratings downgrade report. The analysts suggested that there would be better entry points to build or add to positions.
Perry Ellis International revealed that United Legwear & Apparel would be the master licensee of Pro Player and they would relaunch the brand. The line will be targeted to all sport specialty stores, sporting-goods chains and department stores starting in spring 2017. The company’s stock, though, was caught up in the selling trended down 3.5 percent to $17.78.