Global economic concerns had a big impact on markets this morning, as investor uncertainty contributed to significant declines in the U.S., China, Japan, France, Germany and Middle East markets.
The Dow Jones Industrial average was down more than 1,000 points after the opening bell. The Shanghai Composite Index fell 8.5 percent today.
Local public companies took a hit in morning trading. Among the largest decliners this morning were: Milwaukee-based A.O. Smith Corp., which has focused recent growth in China, down 6.3 percent; ManpowerGroup, down 4.8 percent; and Bank Mutual Corp., down 4.5 percent.
The fear gripping investors stems from indications China’s economy is quickly slowing down and its increased stock market volatility, uncertainty surrounding the U.S. Federal Reserve’s plans surrounding interest rates, and a drop in oil prices.
“What we’ve seen this morning is a lot of panic, which if you’re looking for a low, is actually a good thing,” said Willie Delwiche, an investment strategist at Milwaukee-based Robert W. Baird & Co. Inc. “You need to get panic before you can say ‘OK, a good low’s in place.’”
“What we need to see now is a reversal of the downside momentum that’s been built up. You saw that this morning. All the action’s on the sell side, no one wants to buy anything. So it’s still kind of a wait and see environment to let the situation play out.”
The process of recovering will take several weeks, Delwiche said. By Labor Day, there will likely be evidence that the decline is fading.
“The trigger point is very much central bank related, more Chinese central bank related than U.S. central bank related,” Delwiche said. “Uncertainty over what the Fed is going to do I think is adding to the overall level of uncertainty in the stock market this morning.”
