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U.S. stocks drop on China worries

Tuesday, August 11, 2015 - 01:39

U.S. stocks were rattled after China moved to devalue the Yuan. Bobbi Rebell reports.

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U.S. stocks were rattled by China's surprise move to devalue the its currency, the Dow dropping more than 200 points. China's move increases the likelihood of a September interest rate hike by the Fed, says S&P Capital IQ's Sam Stovall: SOUNDBITE: SAM STOVALL, U.S. EQUITY STRATEGIST, S&P CAPITAL IQ (ENGLISH) SAYING: "Typically, when you devalue your currency that ends up being a stimulative for your own economy, makes your exports more competitive globally, but it also ends of being slightly inflationary. So, I would, actually, say that's good for the prospects that the U.S. will continue with its likelihood of raising rates in September, because that would imply the Chinese economy might end up being slightly more stimulated, and, as a result, could help overall global GDP growth." One of the metrics watched by the Fed, productivity, rose in the second quarter, according to the Labor Department. A separate report showed U.S. small business confidence rebounded from a 15-month low. China's economic concerns weighed on commodity-related stocks. ExxonMobil shares slid, while Freeport-McMoRan shares plummeted. Apple shares fell after Jefferies raised concerns about iPhone demand in China. Shares of antivirus maker Symantec fell after announcing plans to sell its Veritas unit for $8 billion. A day after Google's announced the creation of a new holding company, Alphabet, shares rose. U.S. authorities announced nine people charged with insider trading in a big hacking scandal. They allegedly made up to $100 million in illegal profits. China also weighed on European stocks which closed in negative territory.

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