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Fear continues to rock the U.S. stock market. A 442-point surge for the Dow vanished at the end of the trading session Tuesday, the latest sign of how anxious markets have become about the health of the global economy.

At the end of yet another wild day of trading, the Dow actually ended with a loss of 205 points as fears continued to mount over China's slowing economy and its contagion effect on the rest of the world. Just in the last six trading days, the Dow has lost a total of nearly 1,900 points, or 11%.

"There's still fear around the edges. You need some signs that the market is stabilizing to reassure people it's not going to roll off the edge of a cliff and go tumbling down further," said Bruce McCain, chief investment strategist for Key Private Bank.

Some sort of bounce was anticipated on Tuesday due to the enormous losses that have been inflicted on the markets even though the American economy doesn't appear to be falling off a cliff. All three major U.S. equity indexes had plunged into correction territory -- their first 10% decline from recent highs since 2011.

China seemed to provide the recipe for that rebound overnight. China's central bank slashed interest rates, an emergency action aimed at calming financial markets and boosting economic growth by flooding the markets with cheap money.

Investors around the world cheered China's emergency actions in hopes they will at least stabilize conditions in Asia. European stocks surged 4% higher, with Germany's DAX rallying nearly 5% just a day after falling into a bear market.

The significant market moves underscore how much China matters to the global markets. China is the world's second-biggest economy and its explosive growth over the past two decades helped lift many other countries. That's especially true for emerging markets like Brazil that rely on China's huge demand for its natural resources.

That's why the turbulence in China's stock market has unnerved so many investors. The Shanghai Composite plunged another 7.6% on Tuesday in a selloff that occurred prior to the interest rate cut. The bubble in Chinese stocks has burst, leaving the Shanghai index down a whopping 42% since June 12.

Many market veterans believe the damage done by the selloff in the U.S. was overdone considering the American economy doesn't appear to be tanking at this point. Unlike the market turmoil in 2008, the economy isn't on track for a recession.

Watch for more dramatic market moves as new clues emerge about whether the financial turmoil causes the Federal Reserve to delay its plans to raise interest rates in September until later in the year or even 2016. 

 

 

 

 

 

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Thousands of people are expected to stream into an events center in Dubuque, Iowa, on the banks of the Mississippi River on Tuesday to see Donald Trump.

When they do, his presidential campaign will be waiting, looking to convert casual gawkers into hardcore supporters who will cast votes for the billionaire presidential candidate in the Iowa caucuses next year.

The Republican front-runner's surging campaign is largely viewed as powered by his personal celebrity and his persistent presence on television.

But there's another political upside to being one of the most famous men in America: You don't have to go knocking door-to-door to find voters. They come to you.

When those voters enter the Grand River Center on Tuesday evening, they will immediately be diverted to tables where Trump's staff will recruit them to be county precinct captains, organizers, and volunteers.

It's a huge competitive advantage in a presidential race in which other Republican candidates at times struggle to attract crowds in the hundreds.

It's another reason, beyond strong poll numbers, that Trump's candidacy is being viewed with increasing seriousness both inside and outside Iowa, which holds one of the earliest nominating contests in 2016.

"I've never seen anything like it," said Chuck Laudner, Trump's top organizer in Iowa, as he walked the event space with Reuters days prior to the event. "He's drawing crowds that most candidates only get in the weeks before the general election."

Laudner talks like a man who, after years of fighting the political wars in Iowa with a cap gun, has been handed a shoulder-fired missile launcher.

In the 2012 election, Laudner drove his pickup truck to every county in the state on behalf of Republican candidate Rick Santorum, who was running a shoestring operation. Santorum ended up pulling off a shocking first-place finish in the caucuses.

Skeptics say Trump will fade once voters turn serious about choosing a president come autumn and doubt he has the patience and fortitude to build a grassroots machine not just here but across the country.

Trump's star power and personal fortune have warped the traditional rules that govern campaigning in the state, upending the retail politics that Iowa is known for. When Trump landed his helicopter earlier this month at the Iowa State Fair, he was mobbed by a crowd in the thousands. Last week, he almost filled a sports stadium in Mobile, Alabama.

"His reach is just so far beyond what the rest of these guys can do combined," Laudner said, referring to Trump's opponents. "It's all new territory."

Recent winners of the Iowa caucuses have been campaigns with large resources and strong organizations, such as George W. Bush in 2000 and 2004, or conservatives who appeal to the evangelicals in the state, such as Santorum and Mike Huckabee, who won in 2008.

Trump, like Bush, could have the potential to outspend his rivals here while also appealing to the influential right-wing. His best-funded challenger here, Jeb Bush, is unpopular with those voters.

Trump has 10 paid staff members in the state and most likely will be adding more. One recent innovation has been to send a large tour bus emblazoned with the Trump logo from town to town. It has become its own curiosity, drawing crowds even though just one or two staffers, not Trump, are aboard. The bus even has its own Facebook page.

Trump's campaign hopes to do what has been a long-held goal of politicians in Iowa: bring new voters into the caucus process. Despite the relentless coverage the contest receives here, about only 120,000 Republicans participated in 2012, 20% of the registered Republicans in the state.

 

 

 

 

 

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The selling on Wall Street was so dramatic Monday that it triggered unprecedented emergency freezes on stocks.

Stocks and exchange-traded funds were automatically halted more than 1,200 times, according to Nasdaq.

The high level of trading pauses highlights just how extreme the selloff was in a short span of time. Fears about China's economic slowdown caused the Dow to plummet over 1,000 points when the market opened. The Dow ended down 588 points, its worst decline since August 2011.

Installed after the May 2010 flash crash, the so-called circuit breakers are designed to slow down dramatic selling or buying. They are typically triggered when stocks dive or spike by a certain amount in a matter of minutes. Think of it as a time out. Trading is halted for five minutes, giving investors a chance to calm down and allowing cooler heads to step into the market.

Circuit breakers helped prevent a flash crash. Normally there are a few dozen trading halts a day. But Monday wasn't a normal day with 1,200 halts.

"That's huge. I've never seen that many halts," said Dennis Dick, a market structure consultant at Bright Trading.

Dick said he believes the stock market may have suffered even worse losses if it weren't for the trading pauses.

"The circuit breakers are designed to prevent a full-on flash crash. Those circuit breakers kind of saved the day," he said.

But a closer look at the securities that were halted also raises questions. The circuit breakers were implemented more than 600 times on ETFs, the increasingly-popular securities that trade like stocks. ETFs hold a basket of stocks, removing the risk of betting on a single company.

ETF.com examined the pricing action and discovered at least eight ETFs that showed "flash-crash" style drops at the opening of trading.

A number of them are tiny ETFs like the iShares Core Conservative Allocation ETF (AOK) and Emerging Markets Internet & Ecommerce ETF (EMQQ). In some ways, that may be expected given how smaller ETFs lack liquidity -- the ability to quickly get in and out of a security, even during market turbulence.

 

 

 

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