Big down day for US stocks

The Dow is on course for a third day of losses after dropping to a five-week low.

Stocks opened weakly this morning, with losses sparked by concerns over downbeat manufacturing data out of China, and things have progressed from bad to worse as the day has drawn on.

Heading into the last 45 minutes of trading on Wall Street, losses were steep: the Dow Jones had fallen 192 points or 1.18% to 16,180 and the S&P 500 was also off by more than 1% at 1824.5.

Had the earnings season got off to a blistering start, investors might be taking today’s weaker macro data in their stride, but as it is, the tone of earnings has been lacklustre so far. Most companies have produced results that are far from bad, but that hasn’t been enough to stop a rapid deterioration in investor sentiment.

All said, the macro data hasn’t been disastrous either, but the sharp reaction in stock prices to one bad report out of China reveals much about the nerves of market participants. Volatility has picked up today, but this was always a strong possibility given how today was the busiest day of the week by far in terms of the economic calendar.

Economic data goes back to being thin on the ground tomorrow and, for this reason, we may well see volatility ease off again. Procter & Gamble is the biggest name reporting tomorrow.

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