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Jul 28 2015

Pressure by massive selloff in the Chinese market

7/27/15 Market Recap:

U.S. stocks fell sharply in Monday’s session, pressured by a massive selloff in the Chinese market that raised new concerns about the pace of global growth and whether China’s slowing economy would have a pronounced impact on corporate earnings and revenue growth domestically. China’s primary stocks index fell more than 8 percent on the day, its biggest one-day drop in eight years. While the country’s top regulator said Beijing would continue previously announced plans to stabilize the market, investors sold riskier assets like stocks in masse. The day’s losses were broad but led by the Energy sector, with traders anticipating that China’s weakness would result in lower demand for commodities. A rare bright spot in the market came from Teva Pharmaceuticals (TEVA), which agreed to buy Allergan’s generic drug business for $40.5 billion.

Looking Ahead:

Futures are modestly higher on Tuesday in a rebound from the previous session’s decline, though the situation in China will continue to be closely monitored. The losses there continued, with the main Shanghai index extending Monday’s selloff by dropping 1.7 percent, but the recent volatility on Wall Street could mean that the bulk of the current situation has been priced into shares. Investors are also looking ahead to a two-day meeting by the U.S. Federal Reserve, which begins Tuesday and ends Wednesday, when the central bank will announce a decision on interest rates. While the Fed isn’t expected to raise rates this week, it could give further insight into whether an increase will come in September or December, as it is widely expected to hike rates in 2015. On the earnings front, Ford (F), United Parcel Services (UPS) and Jetblue Airways (JBLU) are all set to report, as is Dow component Pfizer (PFE). On the economic data front, the Case-Shiller index on home prices will be released before the market opens, while a read on July consumer confidence will come out after the open. Make sure to tune into Fox Business this Thursday at 6 PM when our President, Oliver Pursche, joins Charles Payne during the 6 o’clock hour to give our latest outlook and discusses why, in spite of the recent negative market action, we remain cautiously optimistic. And don’t miss this week’s Money Matters with Gary Goldberg, Sunday at 11 AM on WOR 710 AM Radio. Visit our website for more details.