The US markets plunged on Monday, suffering one of its most volatile sessions in years, with the Dow industrials plunging more than 1,000 points in the opening minutes, bouncing back to recover most of the losses and then fading into the final bell to record the biggest drop in four years. Investors remained concerned about global growth in the face of plummeting commodity prices and slowing growth in China, the second largest economy in the world. The attention has now shifted to the West, and the catalyst for what comes next may well come from Jackson Hole, Wyoming. For good reasons, the Federal Reserve would like to raise interest rates. It has made clear that US unemployment is no longer a reason to keep rates at emergency lows, and has prepared for a rate rise next month. On the economy front, the national activity index from the Chicago Fed swung back into positive territory in July, suggesting above-trend growth last month. The index rose to 0.34 in July from negative 0.07 in June, while the three-month average was neutral after a negative 0.08 reading in June. The index is a weighted average of 85 different economic indicators, designed so that zero represents trend growth and a three-month average below negative 0.70 suggests a recession has begun.
Meanwhile, former US Treasury Secretary, Larry Summers, who ran the US Treasury under Bill Clinton, stated that the fierce sell-off on global markets could be the start of a very serious situation for the world and raising interest rates would be a serious error. He compared the rout on financial markets to the build up to the financial crisis of 2008-09. Summers urged the Federal Reserve, led by Janet Yellen not to raise interest rates at its meeting next month.
The Dow Jones Industrial Average lost 588.40 points or 3.57 percent to 15,871.35, the Nasdaq dropped 179.79 points or 3.82 percent to 4,526.25, while the S&P 500 was down by 77.68 points or 3.94 percent to 1,893.21.
The Indian ADRs ended in red on Monday, HDFC Bank was down by 3.17%, Dr. Reddy’s Lab was down 3.07%, Tata Motors was down 1.97%, ICICI Bank was down 0.58% and Wipro was down 0.52%.
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