Recap: Markets Endure More Wild Swings

After a dire Monday for global stock markets, Tuesday dawned with more of the same in Asia. But then central bankers in Beijing sprang into action.

For a time, China's move to cut interest rates seemed to reassure investors that the country was prepared to take fresh measures to boost its economy. Stocks in Europe finished up sharply, and the U.S. opened strong.

But it didn't last. In the final hour of U.S. trading, stocks tumbled anew. The Dow and the S&P finished with their sixth straight down day. The S&P 500 is now off about 12% from its May high of 2131.

Here at MoneyBeat, we tracked the markets, digested the analysis and stayed on top of the news as the trading day moved from Shanghai to London to New York. Here's how it all went down.

5:12 pm | A reversal, or a resumption? | by Paul Vigna

The question that puts this into context is this: did something change in the last hour of the day, or was the rebound simply overwhelmed by the global selloff that has swept across the markets?

Was the end-of-the-day nosedive a reversal, or a resumption? We’ll start getting the answers soon enough, because this whole unsightly stew is now going to be handed over to Asia. Nikkei futures are in the red, after Tuesday’s 4% loss, to say nothing of China’s 7.6% loss. The Shanghai, in fact, is down 22% in the last four sessions alone.

In the end, the U.S. rally never had a chance. Come back to MoneyBeat throughout the Asian and European trading sessions for more coverage.

5:03 pm | “It’s disappointing to see the market give these gains away” | by Ira Iosebashvili

Going into the U.S. trading day, it looked like traders were ready for a different narrative. Armed with news of a rate cut in China, stocks opened higher. But there never seemed like there was much conviction in the trade.

“It’s disappointing to see the market give these gains away,” said Ed Cowart, portfolio manager of equity income and value strategies at Eagle Asset Management. “People used the bounce to lower their exposure to equities. There is still a lot of concern out there.”

“There is a lot of uncertainty surrounding China,” Mr. Cowart said. “People are pretty scared.”

4:56 pm | Checking in on the 10-year | by Erik Holm

The yield on 10-year Treasurys peaked around 3:15 p.m. New York time in the neighborhood of 2.13%. It's nowhere near that now. Following the same ski slope as the equity markets--but extending the trend after the close of stock trading--the yield is now sitting at 2.067%.

To be fair, that's about where it was when stock trading opened in the U.S. this morning.

4:56 pm | Trading volume surges, again | by Paul Vigna

The last three sessions have all seen total composite volume of U.S. stocks, i.e., trading of all U.S.-listed stocks on all the exchanges, total more than 10 billion shares daily. Not only is that well above the year-to-date average of 6.5 billion shares, it's coming during what's supposed to be one of the market's sleepiest times.

Total composite volume on Friday was 10.4 billion shares traded, and at the time that was the high for the year. It was topped on Monday, when 13.9 billion shares traded hands. That was not only the highest volume for the year, it was the highest volume for a single day since Aug. 10, 2011.

Tuesday's volume tailed off just a bit, coming in at 10.3 billion shares. But a serious chunk of that had to come in the final frenzied trading. Around midday it looked like volume was going to fall off the previous days' pace significantly.

If volume equals validity, then this is not a summer selloff you can shrug off.

4:52 pm | Dollar pares gains | by James Ramage

The late plunge in the stock market is again shaking investor confidence. The dollar is continuing to pare its gains, though is still up on the day. The euro and yen built momentum against the greenback as investors began to shed riskier positions that the two currencies funded. That involved buying some euros and yen back that had been sold to put trades on for higher-yielding assets, says Societe Generale's Carl Forcheski.

"Investors in general are still looking for signs of stability," he says. "We got some with China's rate cut, but it didn't last."

Euro down 0.9% to $1.1517, after trading at $1.1423 at 3 pm. Dollar up 0.3% to Y118.82 after trading at Y119.73 an hour before stocks closed.

4:40 pm | S&P 500 down 11.2% the last six sessions | by Paul Vigna

Here are the day's stats for the S&P 500. Many of them are similar to the Dow. Six-day losing streak; worst percentage loss since 2011; worst point-loss since 2008. The S&P is off 11.17% over that stretch, a bit more than the Dow's losses, and it's off 12.35% from its May high, a slightly narrower overall loss than the Dow.

Here's the rundown, with numbers provided by our stats team:

- The S&P 500 Index is down 25.59 points or 1.35% today to 1867.62

- Down for six consecutive trading days

- Down 234.82 points or 11.17% over the last six trading days

- Largest six day point decline since Thursday, Oct. 9, 2008

- Largest six day percentage decline since Monday, Aug. 8, 2011

- Longest losing streak since Thursday, July 12, 2012 when the market fell for six straight trading days

- Off 12.35% from its record close of 2130.82 hit Thursday, May 21, 2015

- Up 176.06% from its bear low of 676.53 hit Monday, March 9, 2009

- Lowest closing value since Thursday, October 16, 2014

- Off 12.35% from its 52 week high of 2130.82 hit Thursday, May 21, 2015

- Up 0.28% from its 52 week low of 1862.49 hit Wednesday, Oct. 15, 2014

- Down 6.62% from 52 weeks ag0

- Off 12.35% from its 2015 closing high of 2130.82 hit Thursday, May 21, 2015

- Month-to-date it is down 11.23%

- Year-to-date it is down 191.28 points or 9.29%

4:35 pm | Big Bank Stocks Fall Just a Bit, But Wells Falls Dramatically | by Maureen Farrell

Heard on the Street’s John Carney outlined earlier today why banks should be able to weather any storm out of China.

Big banks, overall, fared just fine Tuesday. Citigroup Inc. Morgan Stanley, J.P. Morgan Chase & Co., Goldman Sachs Group Inc., and Bank of America Corp. all closed lower, but their shares closed down less than the 1.3% drop in the S&P.

One exception among the big banks: Wells Fargo & Co. Its shares ended the day down 2.4%.

4:34 pm | For the Dow, worst losing streak since 2011 | by Paul Vigna

These numbers are ugly. It's not just that the Dow extended its losing streak to six sessions. There was a seven-session losing streak that bridged July and August. It's the size of the decline. The six-session cumulative loss is 10.71%. That's the worst six-day loss since August 2011. It's lost 1878.74 points over that stretch, and that's the biggest point total for six sessions since Oct. 10, 2008.

Here's the total rundown (numbers compiled by WSJ's stats group):

- The Dow Jones Industrial Average is down 204.91 points or 1.29% today to 15666.44

- Down for six consecutive trading days

- Down 1878.74 points or 10.71% over the last six trading days

- Largest six day point decline since Friday, Oct. 10, 2008

- Largest six day percentage decline since Monday, Aug. 08, 2011

- Longest losing streak since Friday, August 07, 2015 when the market fell for seven straight trading days

- Off 14.45%(rounded) from its record close of 18312.39 hit Tuesday, May 19, 2015

- Up 139.29% from its Bear low of 6547.05 hit Monday, March 09, 2009

- A new 52 week low

- Lowest closing value since Thursday, Feb. 6, 2014.

- Off 14.45%(rounded) from its 52 week high of 18312.39 hit Tuesday, May 19, 2015

- Down 8.42% from 52 weeks ago

- Off 14.45%(rounded) from its 2015 closing high of 18312.39 hit Tuesday, May 19, 2015

- Month-to-date it is down 11.44%

- Year-to-date it is down 2156.63 points or 12.10%

4:25 pm | Dow now down 14% from May high | by Paul Vigna

With today's final cratering, the Dow is now off 14.45% from its May high of 18312. Don't mean to rain on the parade, kiddies, but you really have to start wondering if a 20% drop is in the cards here, and a bear market. At the very least, it's a possibility.

4:23 pm | Year-to-date losses | by Kristen Scholer

For the year, the S&P 500 is down 9.3%. That’s after it booked three consecutive years of double-digit returns. Are we really going to see gains in the mid- to high-single digits in 2015 that strategists are calling for?

The Dow 30 is down 12% on the year. It’s shed 1878 points in the last six days alone.

4:23 pm | Red red red | by Erik Holm

The end-of-day heat map for the S&P 500 looks decidedly different from the one we showed you shortly after the open.

4:20 pm | S&P 500 off 12% from May highs | by Paul Vigna

With today's sharp reversal, the S&P 500 is now off about 12.3% from its May highs of 2131.

4:16 pm | Rate-sensitive whacked | by Kristen Scholer

As bond yields rose, rate-sensitive stocks were among the worst performers on the session. The utilities and telecom sectors lost 3.2% and 2.2%, respectively. These sectors have high dividend yields. So, when rates rise elsewhere, they can come under pressure.

4:15 pm | A 660-point trading range for the Dow | by Paul Vigna

The Dow's trading range, the difference between the intraday high and low, was 662 points. For the S&P 500, the range was 81 points. Compared to Monday, when the Dow dropped 1100 points at the open, today's moves look tame. But they are not. That is a wide range, and the fact that the index fell so far, so fast, and so hard at the close shows that the selloff has more power behind it.

4:13 pm | Apple ekes out gain | by Kristen Scholer

After being up as much as 7.8% Tuesday morning, Apple was one of only two Dow components that ended in the green. The tech giant finished up 0.6%. Disney, the only other Dow stock to book gains, closed up 0.6% too.

4:12 pm | Red red red | by Erik Holm

On a day that started with nearly every S&P 500 stock in the green, only about 75 end up that way.

The biggest decliners: Chesapeake Energy Corp., down 8.8%; Navient Corp., down 7.8%; Exelon Corp., down 6.9%; FMC Corp., down 6.7%.; and Merck, a component in the Dow too, which was down 5.2%.

4:11 pm | All 10 sectors end lower | by Kristen Scholer

All 10 sectors ended in the red. Other than consumer discretionary, the sectors all fell worse than 1%. The discretionary sector finished down 0.4%. A 13% gain in Best Buy helped prevent further carnage in discretionary.

4:10 pm | Tuesday's close near Monday's low | by Paul Vigna

After that final manic selloff, the S&P 500 closed within two points of yesterday’s intraday low.

The S&P closed down 25.60 points, or 1.35%, at 1867.61, and virtually at session lows (1867.08). That is also almost bang-on Monday’s intraday low of 1866.

That makes twice in two days that the selling pressure had driven the index down to that level. Maybe it can hold, maybe it can’t. But there is a lot of banging on that door, that’s for sure. We said yesterday that the move to 1866 was the first skirmish. We'd call this late-session cratering the second.

4:08 pm | Volume heavy | by Kristen Scholer

The NYSE total volume figure it still settling, but it breached the five billion mark, ending well above the 2015 daily average of 3.5 billion shares.

4:03 pm | So much for a turnaround Tuesday | by Kristen Scholer

So much for a turnaround Tuesday. The S&P 500 and Dow Jones Industrial Average extended their losing streaks to sixth straight days, declining 11% each during the past six sessions.

The S&P 500 and Dow 30 now stand 12% and 14%, each, from their May records.

4:00 pm | Ugly | by Paul Vigna

Let's wait for the indexes to settle, but there's no doubt this is going to look ugly. Dow looks like it'll be off more than 200 points.

3:58 pm | No buy orders here | by Paul Vigna

"You couldn't find a buy order with a flashlight" UBS's Art Cashin just said on CNBC, talking about the orders heading into the close.

3:57 pm | Manic trading heading into the close | by Paul Vigna

The moves in just the last ten minutes have been manic. The Dow was down 130 points, then down just five points, now down again 108 points.

3:55 pm | Biotechs clinging to gains | by Kristen Scholer

After underperforming the S&P 500 the past five sessions, biotech stocks are outperforming Tuesday, clinging to fractional gains as the broader market sits in the red. The iShares Nasdaq Biotechnology exchange-traded fund is up 0.9% with a few minutes left of trade. PTC Therapeutics Inc., Celldex Therapeutics Inc. and VIVUS Inc. lead the way up 10%, 9% and 8.6%, respectively.

3:54 pm | Candy from a baby | by Paul Vigna

Our friend and colleague Kevin Kingsbury is somewhere off in suburbia enjoying his vacation, but isn't so far removed and unplugged that he didn't have time to make this keen observation:

Those selling into the opening pop were taking candy from babies.

— Kevin Kingsbury (@KevinKingsbury) August 25, 2015

3:53 pm | Dollar still tumbling | by Erik Holm

Dollar at its low for the day against the yen, at 118.885. The slope there is steeper than in stocks.

3:51 pm | Trading volumes must've surged | by Paul Vigna

Wonder what this'll do to the final trading volume, figures, too. This is clearly a lot of sell orders in the final half-hour.

3:51 pm | Nasdaq in the red too | by Erik Holm

Nasdaq composite also in the red. It had been up more than the others previously. Now it's down less than the others, about 0.1%.

3:49 pm | Dow's trading range more than 500 points | by Paul Vigna

If you're counting at home, that's a 500+ point swing from high to low for the Dow today. Remember when your FA told you about volatility? This is what they were talking about.

Dow down 120 points (0.7%). S&P 500 off 16 (0.8%).

3:49 pm | Best Buy props up discretionary stocks | by Kristen Scholer

Consumer discretionary is the only sector in the green, up 0.1%. It can thank Best Buy for that. The stock is up 13% after reporting better-than-expected earnings and sales Tuesday morning.

3:47 pm | Dow down nearly 100 points | by Paul Vigna

Oof da. And now the water is really bursting through the dam. The Dow is down 90 points, the S&P 500 down 13.

3:45 pm | Volatility rising | by Kristen Scholer

As stocks tumble, volatility is rising. The CBOE Volatility Index is still below where it settled Monday at 40.74. Nonetheless, it remains elevated at a level of 32 -- well above where it spent nearly six months around the 14 mark.

3:44 pm | Indexes toying with red | by Paul Vigna

The indexes are dancing around it, but there is clearly a lot of selling pressure here with 20 minutes to go to the closing bell.

S&P 500 again down, two points...and as soon as I write that, it's back up, less than a point. Will it be nip and tuck like this for the next 17 minutes? Either way, the momentum of this morning is completely gone, simply washed away.

3:41 pm | Dow get red, too | by Paul Vigna

Dow also, briefly in the red. Was down six, now back up 30 points.

3:40 pm | Sector deterioration | by Kristen Scholer

The stock slide continues with eight of the 10 S&P sectors pushing into negative territory. Remember, during the steep selloff the past two days, all 10 sectors ended with back-to-back losses of more than 1% for the first time since 2011.

3:40 pm | Red red red | by Erik Holm

More than half the companies in the S&P are now down for the day. More than 50 stocks in the index are down more than 2%. That happened FAST.

3:39 pm | S&P falls into the red | by Paul Vigna

S&P 500 falls into the red, down two points.

3:37 pm | Ring the bell! | by Paul Vigna

Jeff Macke channels, well, everybody in the market right now:

Ring the bell! Ring the bell! @NYSE pic.twitter.com/mSXsgaQjyM

— Jeff Macke (@JeffMacke) August 25, 2015

S&P 500 up 2 points.

3:37 pm | Half of Dow in the red | by Kristen Scholer

After all 30 Dow components had been up at the start of the session, half have moved into negative territory. Merck & Co. is the worst performer within the index, down 4%. Apple Inc. remains the star. But it too has come off its highs, now up 3% after advancing as much as 7.8% earlier.

3:35 pm | Bond yields hold up | by Kristen Scholer

Stocks have deteriorated throughout the day as bond yields have steadily moved higher. With selling in equities accelerating into the close, the U.S. 10-year Treasury yield remains near its session high of 2.1%.

3:33 pm | The real question | by Paul Vigna

As the markets start cratering, focus on this: the real question isn't whether or not the market finish in the green, so to speak. After five straight losing sessions that saw the S&P 500 taken down by 10%, for any rally to put some steam into the bulls' stride, it's got to do more than just finish in the green.

There really should be some strong buying momentum here. If want the market ends up with is a tepid, low volume up-session, it really points to weak demand.

That's not even considering if they actually slide all the way into the red. If the entire 440-point gain on the Dow evaporates, well, that's a pretty ugly sign.

Dow up 64 points now. S&P 500 up five points. It's coming down fast now, man.

3:30 pm | Dollar losing strength too | by Erik Holm

Dollar is losing steam against the yen and euro, too. A dollar now buys 119.42 yen, down from 120.36 early this morning.

3:27 pm | Buckle up | by Erik Holm

The action is likely to heat up in the last 30 minutes of trading here. Buckle up.

3:26 pm | Sectors weakening as well | by Paul Vigna

Looking at the S&P 500's ten sectors, there's been a notable deterioration overall. Three sectors are now in the red: utilities, telecom, and materials. Industrials is barely positive. Financials, staples, health care, energy are all up between 0.5% and 1%. Tech is up only 1.2%. Leaving consumer discretionary now as the best sector on the day, up 1.6%.

3:24 pm | 'Down but not out' | by Kristen Scholer

"Down but not out," is how Bank of America Merrill Lynch's CIO team describes stocks. It believes equities may be vulnerable in the short term with volatility staying high. But, in the medium term, it thinks "positive economic fundamentals in developed markets should win out."

The team expects "more modest" returns over the next 12 to 18 months and said investors should "stay patient and consider this period as an opportunity to rebalance their portfolios."

3:23 pm | Dow loses steam | by Erik Holm

Seven of the 30 Dow components are down for the day now.

3:22 pm | Markets stumbling into close; Dow up 154 | by Paul Vigna

And your really thought we’d just cruise into the close?

U.S. stocks are in their worst position of the day, with about 40 minutes left in the trading session. The DJIA is up only 154 points, and we’re not even going to put the word only in air quotes, not when the market was up 440 points earlier and lost 588 points yesterday.

The S&P 500 is now up on 16 points, at 1909. After five straight brutal losing sessions, this is not much of a rebound rally.

That's not too cool, Mouseketeers. You might say it's icky. In fact, one astute observer said exactly that.

Stocks are icky again.

— Ivan the K ️™ ️ (@IvanTheK) August 25, 2015

3:12 pm | Earnings woes | by Kristen Scholer

Earnings season is winding down, and corporate profits for the S&P 500 are set to contract for the first time since the third quarter of 2012.

Among the factors restraining growth are a higher U.S. dollar and low energy prices. Sanderson Farms Inc. was the latest company to highlight the negative impact of the two when it reported results Tuesday morning.

"Bulk leg quarter prices remain under pressure as a result of weak export demand affected by export bans related to the discovery of avian influenza in the United States, a relatively strong United States dollar and lower oil revenue in countries with oil- based economies," said Chairman and CEO Joe Sanderson Jr.

"While food service traffic and demand in the United States continue to improve, that demand was not enough to keep pace with additional industry production combined with higher domestic supplies resulting from lower exports. As a result, market prices for boneless breast meat remained under pressure during the quarter."

A higher greenback can adversely affect earnings in several ways. One, it can make earnings abroad worth less when converted back into dollar terms. And two, an elevated greenback makes U.S. exports more expensive and less competitive on the global scale.

Sanderson Farms is down fractionally Tuesday afternoon.

3:01 pm | by Erik Holm

One hour to go.

The Dow is bouncing back a bit after taking a leg down. It’s currently up 300 points, or 1.9%, and sitting at 16171. All but two stocks in the Dow are green.

The S&P 500 is 1.8% higher, at 1928. It too found the lows of the day between 1:30 p.m. and 2 p.m. New York time, but has since moved a bit north.

Nine of the ten S&P sectors are up, but fewer individual stocks have participated in this rally as the day has gone on. Now, about 400 companies are in the green--a figure that's fallen each time we've checked.

The Nasdaq is up 2.6%. The Russell 2000 is up 1%.

2:59 pm | Another firm steps away from September rate hike | by Cynthia Lin

Financial markets are much calmer today, but that's not stopping research firm Stone & McCarthy from reassessing its outlook on Fed policy after the recent tumult.

"Even if the roller coaster that is the stock market smoothes out its ride, we are scarcely four weeks away from the FOMC meeting on September 16-17," firm's economic analyst Terry Sheehan says, thinking now that a rate liftoff at the October or December meeting is more probable. Sheehan notes that moving at either of those meetings would still uphold Yellen's remarks that tightening could happen "later this year."

2:50 pm | Volume subdued compared to Monday | by Kristen Scholer

Total volume on the New York Stock Exchange stands at about 3.3 billion shares with a little over an hour left to trade on Tuesday.

It’s looking like it will settle above the 2015 daily average of 3.5 billion shares, but fall short of Monday’s 6.6 billion level.

Volume on Monday was the heaviest since 2011.

2:44 pm | Hedge funds dove in to the plunging stock market yesterday | by Rob Copeland

Hedge funds bought record amount of stocks yesterday, Morgan Stanley’s prime brokerage says today in a private client note, perhaps helping to explain the market’s partial recovery from its early morning lows.

Despite the median long/short fund losing 1.49% on Monday–the 4th worst single-day loss in 6.5 years–managers piled in, adding longs across North American names, including technology and healthcare stocks, the bank says.

Even before today’s comeback, many hedge-fund managers believed the recent tumult will be a relatively short-term dip, rather than a full-blown recession.

2:42 pm | A bear market? Not likely | by Paul Vigna

Tuesday's rally - for U.S. equities at least - is not just a dead-cat bounce, John Higgins at Capital Economics wrote. Why's he so sanguine? Because major changes in the market, the 20%+ moves that turn bull markets into bear markets, almost exclusively come around recessions. "And we doubt very much that one of those is around the corner."

Since 1950, there have been nine bear markets and ten recessions, he says. Most of downturns in the market came during or around the downturns in the economy. A notable exception is 1987, when Black Monday created a one-day bear market in an of itself.

The firm expects GDP growth of 2.3% this year and 2.8% in 2016, and isn't worried that the crash in China's stock market will have a material effect on the U.S. economy.

DJIA up 262 points at 16133. S&P 500 up 28 at 1921.

2:26 pm | Bonds benefited from “human latency factor” | by Mike Cherney and Sarah Krouse

Compared to yesterday’s wild moves in stocks and equity ETFs at the start of U.S. trading, fixed-income markets on Monday were calm. In part, that was because electronic-trading strategies are less prominent in the debt markets, traders said.

Amar Kuchinad, a former Goldman Sachs trader who is now chief executive officer of corporate-bond trading platform Electronifie Inc., said the bond market benefitted from a “human latency factor.”

“It is a human pressing buttons and making trades – it’s a much more voice-driven market” than the stock market, Mr. Kuchinad said. “You can sit on your hands and we did see a lot of clients just waiting, knowing that it wasn’t a good opportunity to sell.”

Fixed-income ETFs were down on the day, though investors pulled a net $58 million from bond ETFs overall, a modest figure, according to data provider Markit Ltd. The iShares iBoxx $ High Yield Corporate Bond ETF, which tracks junk bonds, saw a $169 million net outflow. But the iShares iBoxx $ Investment Grade Corporate Bond ETF, which tracks high-grade bonds, attracted a $70 million net inflow on Monday.

“It wasn’t really a fixed income story yesterday, it was equities catching up to fixed income,” said Reginald Browne, senior managing director and head of ETF trading at Cantor Fitzgerald LP. He said the redemptions in the iShares junk-bond ETF were “very small compared to the action in the equities market.”

Some investors waded back into the market on Tuesday. Matthew Duch, a portfolio manager at Calvert Investments, which oversees $13.5 billion, said he considered selling some bonds from Ally Financial Inc. on Monday, but decided to hold off. On Tuesday, Mr. Duch said the tone was more positive, so he sold some Ally bonds “just to raise a little bit of cash.”

Bond markets on Monday “felt rough, but it’s nowhere near what we saw in ’08,” said Putri Pascualy, portfolio manager and credit strategist at Pacific Alternative Asset Management Co., which oversees about $10 billion.

2:22 pm | Calls on liftoff (continued) | by Kristen Scholer

Recall, Monday we wrote about how the market tumult caused economists at Barclays to dial back their expectations of liftoff and led economists at RBC Capitals Markets to reassess their view...

2:19 pm | Less certain about September | by Michael Derby

J.P. Morgan economist Michael Feroli is among those saying it's now far less certain whether the Fed will raise rates at its September meeting given the current global financial and economic climate.

"We now think the odds of a September liftoff have dipped below 50%, perhaps to around 35-40%. Even so, we still think the odds of liftoff are greater for September than for any other single meeting."

That said, Feroli still believes that 2015 will be the year for liftoff.

"If global growth jitters do cause the Fed to defer on September liftoff, we still see the odds as quite high that the first rate hike will happen this year, and would not dismiss the possibility of an October move," he wrote.

2:17 pm | Bond traders show restraint | by Min Zeng

Despite the rise today, the 10-year yield remains at very low level and still below the level at the end of 2014.

After getting hit by short bets recently, some traders are hunkering down and refraining from jumping the gun to short the market today. Brian Edmonds, head of interest rates at Cantor Fitzgerald, says it is difficult for the 10-year yield to trade below 2% consistently but it doesn’t mean yields would spike from here.

“Some people are seeing value in stocks after the steep selloff, but the question is, could this last? “There are still plenty of risks out there and volatility has been head-spinning.”

The yield on the 10-year note was recently 2.107% vs 1.997% Monday.

2:15 pm | Calls on liftoff | by Kristen Scholer

Despite some stabilization in stocks Tuesday, market participants are looking less convinced the Federal Reserve will raise rates in September. Here's a roundup of commentary...

Gennadiy Goldberg, U.S. strategist at TD Securities, believes September is still on the table, though. "A rapid stabilization in global markets could still clear the way for a September rate hike," he said. "We believe a gradually improving domestic data tone over the next few days could prove helpful in firming rate hike timing, likely pushing the odds of a September hike closer to even if broader equity volatility remains under control."

1:54 pm | What exactly just happened? | by Paul Vigna

Scrolling through the Tape, there aren’t any obvious triggers for that move down. Did some rumor do it?

Here’s what we see on the DJ Broadtape. Nothing seems particularly pressing:

1:03: US 2-Year Notes: Bid-To-Cover 3.16

1:08: Sanderson Farms Results Disappoint — Update

1:19: Donald Trump Laps Rivals in South Carolina Poll, Mocks Lindsey Graham

1:23: Mylan: Intends to Launch Offer to Acquire Perrigo’s Shares After It Receives Approval of Mylan Shareholders

There is the fall in crude prices, which have been slowly losing steam since late morning. WTI crude’s now up on about 2.1% at $39.03. That puts it back where it was around 5:30 a.m. New York time. Still, the move in stocks was extremely sudden, and crude’s been losing altitude for hours. It may be a contributing factor, but likely isn't the only factor.

Maybe it was something unspoken, and in a perfect illustration of how completely jittery and undisciplined this market is right now, we have this note from UBS’s Art Cashin:

“Stocks pull back sharply as traders claim it is a reaction to a rumor out of China. No specifics as to what the rumor was supposed to be about.”

We don’t doubt that is what Mr. Cashin is hearing. But, really, a rumor out of China, with absolutely no specifics whatsoever? That’s what knocked the market down? Talk about an HFT version of the old Telephone Game.

S&P 500 up 26 points, or 1.4%, at 1920. DJIA up 244, or 1.5%, at 16115.

1:34 pm | Stocks lose some steam | by Paul Vigna

Whoops, somebody slipped on a banana peel. Markets take a serious dogleg down at 1:25 p.m. S&P 500 is now up only 25 points, or 1.3%, at 1918.

1:34 pm | Market pulse | by Kristen Scholer

Stocks are off their highs early afternoon Tuesday, but remain up on the session. The Dow Jones Industrial Average and S&P 500 are both up 1.4%. That’s after the Dow 30 had been up as much as 2.8%, and the S&P 500 was higher by as much as 2.9% earlier in the day.

Growth-sensitive sectors are leading the charge with consumer discretionary, tech and energy stocks the best performers. A rebound in WTI crude oil is providing a tailwind for beaten-down energy names.

Apple remains the best performer within the Dow 30, up 4.3% after increasing as much as 7.8% Tuesday morning.

Treasury yields, a proxy for growth, are rising.

Meanwhile, the CBOE Volatility Index, or Fear Gauge, is down 29%. But it remains elevated at a level of nearly 29. Recall, when stocks were stuck in their narrow range from the middle of February to last week, the VIX hovered around a level of 14.

1:22 pm | Treasury sale draws light bidding | by Cynthia Lin

The U.S. Treasury books mediocre results at this afternoon's 2-year Treasurys sale, attracting only enough bids to cover the $26 billion sale 3.16 times. That's the lowest cover ratio since October 2014.

The 0.663% yield is a bit higher than the going market rate, reflecting soft demand.

Indirect bidders take 47% of the supply, while directs take 10.3% -- both down from their group's recent allocations.

The price rally yesterday amid a sharp flight to safety may have dampened appetite today, but so is the possibility of a Fed rate increase this fall that would hurt shorter-dated notes the most.

Treasury prices hold session lows after the sale, with 10-year notes down 31/32 to yield 2.108%.

1:17 pm | Shades of Black Monday, circa 1987 | by Paul Vigna

We were pretty sure yesterday morning we were seeing something we’d never seen before. The opening move saw the Dow plunge straight down, nearly 1100 points in a matter of minutes. Every move of the index was covering whole chunks of ground, 40 and 50 points at a tick. In a radio interview later in the afternoon, we called it breathtaking, and it almost literally was.

In his daily Gartman Letter morning note, Dennis Gartman shared his feelings about Monday’s opening, and he had to go far, far back to find a parallel:

The violence of the selling in the U.S. market on the opening was unlikely [sic] anything we can remember in our forty+ years of being involved in the capital markets; indeed, it was for a while as violent and as chaotic as was Black Monday and then the morning of Black Tuesday in October of ’87, or at least it seemed so to us.

However, this time there was no single trade that saved the market from oblivion as there was in the early hours of Black Tuesday when one or two huge futures trades on what was then the “Major Market Index” traded on the CBOT turned the tide. This time, perhaps, it was the HFC’s themselves that turned the tide as they stepped in to buy stocks and sell futures and then to sell stocks and buy futures, creating liquidity when liquidity was most seriously needed.

1:16 pm | Is the panic over with? | by Kristen Scholer

The turnaround in stocks Tuesday begs the natural question: Is the panic over with?

"Likely not," wrote James Stanley, currency analyst at DailyFX. He thinks China remains a threat and said that as weakness in the world's second-largest economy persists at a time when the Fed is pushing to raise rates and commodity prices are melting down, it creates a difficult environment for investors to hold risk.

1:02 pm | Big banks can weather this storm | by John Carney

Fears of China-inspired financial contagion have taken a toll on U.S. banks. So far, though, there aren’t obvious signs of deeper stress. That is a positive for financial-sector stability and the U.S. economy.

It also suggests the shellacking big-bank shares have taken—they are all down sharply since the start of August despite Tuesday’s U.S. market rebound—isn’t wholly warranted.

In recent years, regulators and banks have undertaken a herculean set of tasks to set U.S. banks on firmer ground. As a result, big banks are less exposed to trading losses, financed with far more capital and are far less dependent on wholesale, short-term financing. As well, they are armed with arsenals of safe, liquid assets they can sell in dire straits.

That doesn’t mean banks won’t be buffeted by financial-market ripples. But as we explain in Heard on the Street, higher levels of capital and liquidity, along with lower leverage, should help them withstand unforeseen nasty surprises.

12:57 pm | When does the correction end? | by Paul Vigna

If the S&P 500 closes on Tuesday at a level of 1918 or greater, at it's currently on pace to do, is the correction over?

The 1918 level is 10% below the index's May record high of 2131. With Monday's losses, the S&P 500 was down a shade more than 11% from the May highs, meaning it registered what's commonly defined as a correction. The question now is, when does the correction end?

The answer is it won't be today, unless the index rises 10% from Monday's close. Granted, this isn't exact physics we're talking about here, and different outfits may define this differently. But Journal style is that the market remains "in correction territory" until the index rises 10%.

So, assuming for the moment at least that yesterday's closing level of 1893 remains the low - and that assumption is solely for the sake of illustration - the S&P will have to get back to 2082 before we'd call off the correction.

Now, "correction territory" itself is less used as a designation than bull and bear markets, which are defined by 20% moves up or down, respectively. Those are the real ones to watch.

So, if you're keeping track at home, the bear really arrives on Wall Street at 1705 on the S&P 500.

12:52 pm | Don't forget strong European earnings | by Josie Cox

Monday's sell-off in global stock markets looks like it was overdone, says Andreas Nigg, a senior portfolio manager at Vontobel Asset Management.

"We should not forget that we just completed the second quarter earnings season in Europe with very strong results," he says. "Our current expectation is that the slowdown in China does not lead to a global recession, [and] if that forecast turns out to be correct then markets should be higher by year-end," he adds.

He says that the "indiscriminate selling" on Monday had created some interesting opportunities, for example within financials and health care in Europe.

12:49 pm | Still cautious on global growth | by Josie Cox

Veteran U.K. fund manager Neil Woodford, head of investment at Woodford Investment Management, says that after the huge selloff in global stocks early this week he remains cautious on the outlook for global growth.

"On balance, [we] believe that interest rate increases, both in the U.S. and here in the U.K., are further off than consensus has hitherto believed," he writes in a blog post on the company's website. "Weak global growth and productivity, deflation and excessive debt remain our principal concerns," he adds.

12:36 pm | A level of calm | by Erik Holm

Just past the three-hour mark, and U.S. markets have reached a level of calm. While stocks are still up strongly, the action seems to have quieted down somewhat.

The Dow is up 373 points, or 2.4%, to 16243. Of the 30 stocks in the blue-chip index, 28 are green. Neither of the two exceptions–Verizon and Merck–are down more than 0.4%.

The S&P 500 is up 2.4% to 1938. But about 50 stocks are in the red, higher than at any other point where we’ve stopped to count today.

The Nasdaq composite is up 3.3% to 4676. The Russell 2000 is up 1.7% to 1131.

The yield on the 10-year Treasury is at 2.113. It’s at its highest since last Thursday.

WTI, the U.S. crude oil benchmark, is up more than 3%. But it's still under $40 a barrel.

12:15 pm | Keep an eye on crude, stock volume | by Paul Vigna

Keep an eye on oil and volume, UBS’ Art Cashin said in a midday note.

“Stocks spinning wheels just below the day’s high as they continue to monitor WTI. Volume nowhere near where we were at this time yesterday. At noon, the run rate projects to 920 million to 1 billion shares versus yesterday’s 1.66 billion.”

WTI crude oil is up 3.4% at $39.54 a barrel, but has bouncing around quit a bit this morning, in a range that’s stayed a little south of $40, and a little north of $38.

As for volume, Mr. Cashin’s referring tovolume of NYSE-listed stocks traded on the NYSE. Composite NYSE volume yesterday was 6.5 billion shares, and total composite volume of all U.S. stocks was 13.9 billion, the single highest total since Aug. 10, 2011.

Volume equals validity.

12:10 pm | Airlines recover after turbulance | by Jack Nicas

Airline stocks have been on a more extreme rollercoaster than the broader U.S. stock market this week. Many U.S. carriers’ shares dipped more than 8% early yesterday before settling around a 4% decline. But today, airlines are erasing those declines, with many are up more than 4%.

American Airlines fell 5.4% yesterday and now up 4.4%. Republic Airways has been most volatile, with a 7% decline yesterday and a 8.5% increase today. The firm last week offered its pilots a final contract that it says is needed to avoid bankruptcy.

Overall this week, JetBlue has fared best, up 5.2% at midday.

Broader indexes are up a little over 2%.

12:06 pm | Junk bonds are following stocks higher | by Mike Cherney

Junk bonds are on the rise today, in tandem with the stock market, as risk assets recover following yesterday’s plunge.

An iShares ETF that tracks the junk market is up 0.8% in recent trading, according to FactSet, and individual bonds are also improving. A 2024 bond from California Resources is trading around 71 cents on the dollar, up from 68 cents yesterday, according to MarketAxess.

Corporate debt followed stocks lower yesterday, but traders said the reaction in fixed income was relatively muted, given that bond markets had already priced in some of the concerns that hit equity traders.

12:00 pm | Stock market, economy not one in the same | by Kristen Scholer

Investors are probably relieved Tuesday to see the stock market recovering after global growth concerns pushed the Dow Jones Industrial Average and S&P 500 14% and 11%, respectively, from their May highs. While questions remain about the pace of growth, Ian Shepherdson, chief economist at Pantheon Macroeconomics, says don't turn to the stock market for clues as to how the economy is going to perform over, say, the next year.

"The relationship between swings in stock prices over single quarters and GDP growth over the following year is non-existent," said Mr. Shepherdson.

Of course, an improving growth picture helps stocks. And a rising equity market can lead to greater consumer confidence, boosting spending and the overall economy. But, at the end of the day, the economy and the stock market are not one in the same.

Mr. Shepherdson said that if stocks don't recover a bit over the next few months, prudence dictates he should reduce his 3.75% U.S. GDP growth forecast for next year. "Unless the sky falls in, though, we’ll still be expecting the labor market to tighten much faster than the Fed," he said. "That in turn means the Fed will have to raise rates faster than it, and the markets, expect."

11:55 am | Utilities in the red, but only utilities | by Paul Vigna

A tiny little bit of red is creeping into this field of jade green as the noon hour approaches. The S&P 500's utilities sector has fallen into the red, now down -0.8%. The sector hit its session high in the first 20 minutes of trading, and has been gradually declining since. Is it a sign?

Probably not. Remember, this index didn't move a lot yesterday, and was the smallest mover earlier this morning as well. Moreover, the top four sectors this morning - tech (up 3.5%), consumer discretionary (3.1%), healthcare (2.8%), and financials (2.4%) - are all still rising sharply and have either maintained (financials) the initial morning burst, or built on it (the other three).

So there still seems to be a lot of buying enthusiasm for the sectors that are really moving things today.

11:45 am | Tale of the tape in Europe | by Josie Cox

Yet another day of huge moves in European stock markets has drawn to a close and here’s the final tally:

The Stoxx Europe 600 ended the day 4.2% higher, having on Monday suffered its biggest fall in percentage terms since December 2008. Tuesday’s close is the index’s biggest daily gain since September 2011. Germany’s DAX finished the session a whisker under 5% higher, London’s FTSE 100 rose 3.1% up and France’s CAC gained 4.2% .

One of the biggest gainers among the European country indexes Tuesday was Italy’s MIB. It advanced 5.9% having fallen 6% on Monday.

11:42 am | Let's welcome this correction | by Jose Cox

Giordano Lombardo, group chief investment officer at Pioneer Investments, says that after a very long equity bull market, a correction should not come as a surprise, “and to a certain extent, should be welcomed.” He says the “market correction” could provide some opportunities to rebuild risk exposure at cheaper prices in companies that have, what he calls, a solid business model and that are not exposed to geographies that are under pressure, particularly in emerging markets. “In the eurozone, we still see positive signals from consumer and corporate sectors. Financial stability conditions are improving and a weak euro, as well as low oil prices, are supportive for the economic growth.” Pioneer Investments has $244 billion in assets under management globally.

11:33 am | Raiding Treasurys - Jupiter Asset Management | by Christopher Whittall

Ariel Bezalel, manager of the Jupiter Strategic Bond Fund, says he's been buying long-dated U.S. Treasurys and also two-year Treasurys with the view that an interest rate rise from the Federal Reserve is currently unlikely. "We believe that high debt levels, weak commodity prices and other deflationary forces in the global economy are likely to put a ceiling on economic growth and inflation.

As a result, the funds have so far benefited from investors' flight to safety this week," says Mr. Bezalel. Jupiter Asset Management oversees £35 billion in assets.

11:31 am | Higher highs | by Erik Holm

Two hours into the U.S. trading day, stocks just reached new peaks for the day before pulling back slightly.

The Dow is now up 389 points to 16260. A few minutes ago, it was at 16313. Of the 30 stocks in the blue-chip index, 29 are up.

The S&P 500 is up 2.5% to 1941. It touched 1948 around 11:23 a.m. New York time. Roughly 470 of the stocks are green. All 10 sectors are up.

The Nasdaq is up 3.3%. The Russell 2000 is up 1.4%.

11:26 am | Lack of other news makes people nervous | by Christina Rexrode

This month’s stock-market volleys have given the jitters to some Bank of America wealth-management clients: They’ve been calling in to ask if this is a repeat of the Asian financial crisis.

Chris Hyzy, chief investment officer of global wealth and investment management, said advisers have been reminding clients that market gyrations are a normal part of investing. One thing that’s exacerbating the worries, Mr. Hyzy said in an interview, is a vacuum of other news: When there’s little in the way of earnings reports or central-bank statements, that’s when investors get nervous — “when your basis is, what is going on on the ticker tape.” He cautioned against assuming that this is a crisis repeat.

“You have to separate what happened when with what is happening now,” Mr. Hyzy said.

11:25 am | Apple adds value | by Kristen Scholer

After underperforming the S&P 500 during the five-day downturn, Apple Inc. is soaring Tuesday, outpacing the broader market. The stock is the 12th biggest percentage gainer in the S&P 500, and it's having its best intraday performance in seven months, rising as much as 7.8%.

A general recovery in the stock market helps. So too does an upgrade from an analyst at Wells Fargo Securities who raised his rating on shares to "outperform" from "market perform," saying the correction in Apple shares is “overdone.”

Apple, one of this year’s popular stocks, shed 12% in the past five sessions as the S&P 500 fell 10% amid fears of global growth. Even with Tuesday’s gains, Apple remains 19% from its April record, prompting Wells Fargo analyst Maynard Um to get more bullish.

“We are incrementally more positive,” wrote Mr. Um in a note to clients Tuesday. “While we note that our fundamental stance on Apple’s challenges are unchanged, we believe shares have over-corrected.”

11:23 am | Another Fed tea leaf lands tomorrow | by Paul Vigna

If you're looking for Fed tea leaves, another one may be dropped tomorrow. The New York Fed president, William Dudley, is scheduled to speak in the morning (10 a.m.), at a press briefing on the regional economy.

As a set-up to that meeting, we got an email this morning from the NY Fed, "In Review," a roundup of some posts and reports. Mr. Dudley visited western New York, and there's a post about it. He visited Rochester, where he met with business leaders, and Buffalo, where he toured a solar plant.

There's a link to the bank's August "Snapshot" report, which highlighted rising consumer spending in the second quarter, falling business spending, and "solid" payroll growth.

There was a link to the series on market liquidity that was published on the bank's Liberty Street Economics blog.

We don't mean the bring up old wounds, but that trip to Buffalo couldn't help but remind us of an infamous trip Mr. Dudley made to Queens in 2011, when he tried to explain inflation by looking at iPad prices. "I can't eat an iPad," was the response from one person in the audience.

We doubt he'll bring up iPad prices tomorrow. Will he talk about interest rates? And September? He'll at least be asked, we can guarantee that.

11:17 am | Dollar still in thrall to market sentiment | by James Ramage

Emotion continues to drive the dollar, and likely could for some time, one day after China worries roiled markets, says BNP Paribas' Masafumi Takada. U.S. fundamentals, in turn, will take a back seat.

All sorts of economic datapoints were able to move the dollar in recent months after the Fed emphasized it's pay close attention to data in determining when to raise rates. But in the past two weeks, fears about teetering global growth and falling inflation have upturned consensus trades.

For now, stock recoveries in Europe and the U.S. today have encouraged some investors to step back into favored dollar positions, Takada says.

"Right now, things have calmed down since yesterday--a Chinese rate cut helped," he says. "But that's a temporary measure. I don't think the worst is over in China."

The dollar is currently up about 1% against the yen to 118.68.

11:14 am | Goldman says it's 1998--not 2008---all over again | by Maureen Farrell

Analysts at Goldman Sachs have outlined why they see a parallel between the correction of the past few days and the U.S. stock market’s response in 1998 to the Asian financial crisis.

Goldman sees a rebound coming. The bank’s analysts predicts that the S&P 500 will rise by 11% from its current levels to reach 2100 by the end of 2015.

For more on Goldman’s reaction to the correction and their advice on how to play it, see MoneyBeat’s post here.

11:00 am | CME raises deposits on equity futures | by Tatyana Shumsky

As we noted was likely to happen yesterday after a day of volatile market swings, the CME Group increased the amount of deposit required for trading some equity index futures. The exchange wants more money down for NASDAQ 100 futures and Nikkei 225 futures, starting on close of business Tuesday. The higher buffer aims to ensure brokers and clients are adequately capitalized should volatility spike again.

10:55 am | Playing the percentages, this rally's not much | by Paul Vigna

This morning’s gains for the Dow, currently around 300 points, are impressive, but nowhere near as impressive as the eight-point gain the index had back in 1933.

How can that be? It’s all about the percentages.

At its high this morning, just ten minutes into trading, the Dow was up 380 points, or 2.4%, at 16251. Now, that’s a pretty big point gain, though it would still be just outside the top-10 all time, based on points. The 10th largest one-day point gain came on July 29, 2002, when the index rose 447 points (5.4%). The largest one-day point ever came on Oct. 13, 2008, when the index rose 936 points (11%).

When you shift to a percentage basis, however, this morning’s surge is nowhere near the top ten. At its best today, the index was up 2.4%. The tenth largest one-day gain ever, measured by percentage gain, was a 9.36% rally on Nov. 14, 1929. The index rose 18.59 points that day, closing at 217.28.

The largest gain for Dow, ever, was a 15.34% jump on March 15, 1933 – when it rose all of 8.26 points to 62.10. That’s why a 300-point rally, or loss, on the Dow when the index is sitting around 16000, or 17000, or 18000, isn’t as impressive as an eight-point gain, back when the index was in the 50s.

10:53 am | Markets haven't been this high since... yesterday | by Erik Holm

To put today’s 2% gain for the S&P 500 in perspective, it gets us back to levels not seen since… mid-day yesterday.

That’s right. For all the trumpeting about China soothing the fears of investors, the U.S. stock market was actually higher about 24 hours ago. And it was significantly higher last week, as this five-day chart shows. You can click for a larger image.

10:40 am | Hedge funds aren't running for the hills | by David Benoit

Big hedge funds don't appear to be liquidating their stocks.

Symmetric, a hedge fund tracker, pulled data on 50 companies worth over $5 billion and looked at the ones with the highest percentage of hedge-fund ownership. Those stocks have underperformed this month but did better than their sector yesterday, a sign Symmetric says the hedge funds aren't running for hills. Meanwhile, stocks that are most popular among Symmetric's hedge fund list are underperforming, but not significantly.

In 2008, hedge funds liquidating stocks amid redemptions and cash problems intensified market moves. There's no sign of that now.

10:39 am | More about that Richmond Fed report | by Paul Vigna

Following up on that Richmond Fed survey. There are a handful of these from various Fed branches every month, and they provide good insights into the local economy.

Last week, we got the Empire State survey (New York Fed) and the Philly Fed report. The New York Fed report was ugly. Down to -14.92 in August from 3.86 in July. The consensus was for a positive 4.75. The Philly Fed offered a brighter picture. Their index rose to 8.3 from 5.7. Consensus was for 7.5.

So, the Richmond Fed's report slides in the middle there, sort of, with that flat zero reading, down from 13 in July. The next report is Thursday's survey from the Kansas City Fed. Consensus is the index will narrow to -4 in August from -7 in July. On Monday (the 31st), we'll get the Dallas Fed report.

10:36 am | Gold is down | by Tatyana Shumsky

Gold extended earlier losses after a one-two punch of strong U.S. economic data reanimated concerns about higher U.S. interest rates.

Gold prices erased nearly three days of gains, with futures down 1.4% at $1,136.60/oz.

10:34 am | Drug stocks outpace | by Peter Loftus

Drug stock indexes are rebounding more sharply than the broader market today, reinforcing year-to-date outperformance fueled by improved research productivity and mergers-and-acquisition flurry.

The NYSE Arca Biotechnology index is up 3%, the Nasdaq Biotech index is up 3.4%, and the NYSE Arca Pharmaceutical index is up 2.75%, versus 1.8% gain for Dow Jones Industrials and 2.5% rise in Nasdaq.

A big gainer today is Acorda, up 14% thanks to a victory in its legal defense of a U.S. patent for multiple-sclerosis drug Ampyra. Other big movers: Novo Nordisk, Gilead and Biogen.

10:30 am | One hour in the books | by Erik Holm

An hour into the U.S. stock-trading day, the Dow is now up 275, or 1.7%, to 16145. It’s gotten as high as 16264.

The S&P 500 is up 2% to 1930. It peaked a bit earlier at 1941.

The Nasdaq is up 2.4% to 4635. It earlier reached 4687.

10:27 am | Morgan Stanley and Bank of America get thumbs up | by Peter Rudegeair

Investors in bank shares should use the recent slump to load up on shares of Morgan Stanley and Bank of America, according to two analyst notes on Tuesday morning.

Nomura Holdings Inc. analyst Steven Chubak wrote that Morgan Stanley shares appear to have been oversold given that they have performed over 5 percentage points worse than its peers since the start of the third quarter “despite little change to consensus earnings.”

Mr. Chubak thinks concerns about energy exposure drove the weakness, but that should not be an issue for Morgan Stanley given it is primarily tied to investment-grade multinational companies, which are more resilient. Meanwhile, Sanford C. Bernstein analyst John McDonald favored Bank of America shares in part because its business is more reliant on U.S. consumers and companies, and the economic outlook has not changed. BofA gets 87% of its revenue from the U.S. compared to 74% for J.P. Morgan and around 47% for Citigroup, according to Mr. McDonald.

10:16 am | New home sales still well below pre-recession peak | by Paul Vigna

Here's the top of our home-sales story, written by Anna Louie Sussman and Josh Mitchell:

WASHINGTON -- Sales of newly built homes rose in July, a sign that the housing market is slowly recovering.

New-home sales rose by 5.4% to a seasonally adjusted annual rate of 507,000, the Commerce Department said Tuesday. They had unexpectedly sank 7.7% in June.

The government revised June's figures to 481,000 sales from a previously reported 482,000.

New-home sales account for about 10% of the home purchase market, with existing homes making up the rest. Month-to-month data can be volatile; July's rise had a margin of error of plus or minus 14.8 percentage points.

Economists surveyed by The Wall Street Journal had expected a rate of 510,000.

Existing home sales have reached pre-recession levels, but new-home sales are still roughly one-third of their pre-recession level. In July 2005, new home sales peaked at 1.4 million. Now, that level itself is the very picture of a bubble, so a more normal number is probably somewhere north of where are right now, but south of '05.

10:12 am | Best day for emerging markets in about four years | by Kristen Scholer

It’s been a rough ride for emerging-market funds since China’s market peaked in June, but the Vanguard FTSE Emerging Markets exchange-traded fund, the largest emerging-markets ETF by assets, is staging a big comeback Tuesday. The fund is up as much as 6.3% in mid-morning trade, seeing its best intraday percentage gain in nearly four years.

The recovery comes after the ETF booked six straight days of losses, declining almost 13% during that time. Concerns about slowing growth in the world’s second-largest economy and a collapse in the Shanghai Composite have weighed on this ETF that is about 27% exposed to China. Since China’s market peaked in the middle of June, the emerging-markets ETF is off 19% — even with Tuesday’s gains.

Late May, we told you about how emerging-market ETFs with heavy exposure to China were benefiting from the surge in China’s stock market. How quickly things can change though….

When China’s stock market peaked on June 12, the Vanguard emerging-markets ETF was up 4.1% on the year, outperforming the S&P 500 that was higher by 2.4%. Now, with China’s carnage, the ETF is down roughly 16% on the year, 10% worse than the S&P 500′s 6% year-to-date decline.

10:11 am | 10 a.m. data check | by Paul Vigna

A trio of econ reports hit the Tape at 10 a.m. Here they are:

9:59: Richmond Fed: Aug Manufacturing Index 0 Vs July 13

10:00: US Conference Bd Aug Consumer Confidence 101.5 Vs Jul 91.0

10:00: US July New Home Sales +5.4% To 507K; Consensus 510K

It'll be interesting to see if any of those get the market's attention. Certainly the Conference Board report is a positive - expectations were for 93.8. But the new home sales report was just a bit weaker than expected, and the Richmond Fed report is a dud. Off hand, I think this tips the balance of the regional Fed surveys to the downside, but I'll have to go back and look at the others from this month.

Dow up 286 at 16158.

10:07 am | A trip through a field of clover | by Erik Holm

The S&P 500 heatmap is like a trip through a field of clover this morning. It’s looking a bit different from yesterday’s bloody sea of red.

Forty minutes into the trading day, only about a dozen stocks in the benchmark index are in the red. Roughly twice that number are up more than 4%.

10:04 am | Yields on yuan-denominated securities rise | by Chiara Albanese

Yields on yuan-denominated financial securities in Hong Kong have been rising, following China’s move to devalue its currency, notes Brown Brothers Harriman.

“One widely followed dim sum bond index saw the yield rise to around 5.39% today, from just under 4.4% at the start of the month,” says Marc Chandler at the bank. This, he says, adds to the already salient risk of capital outflows. “Any hint that policy makers are pursuing a concerted effort to depreciate the currency will only increase outflows.”

10:01 am | Yesterday's 'high' may hold a clue | by Paul Vigna

This is moderately interesting. The Dow's initial surge this morning took it as high as 16248. That's with hailing distance of yesterday's intraday high of 16357. Wonder if there's some resistance in that range. Might be a good idea to keep an eye on that intraday high from yesterday.

The index is currently up 300 at 16171.

9:53 am | Volume equals validity | by Paul Vigna

One tell on this rally will be the volume, UBS' Art Cashin said in his morning note (offered up along with his daily mantra about staying alert).

"Traders will watch the volume on this celebratory rally. They will also watch crude. If it weakens noticeably, it could pull the rug out from under the one day bull. Stick with the drill – stay wary, alert and very, very nimble."

The volume the past few sessions - big selloffs all - has been high, especially for the back-end of August. If there's little volume to back up this rally, it may burn itself out quickly. On the other hand, if there is significant volume, the rally could have legs.

Volume equals validity, as the old saw goes.

9:51 am | Comparing J.P. Morgan to LeBron James | by Emily Glazer

Banking analyst Mike Mayo of CLSA grows more bullish on J.P. Morgan, upgrading shares to buy from outperform before the open.

He compares the bank to LeBron James, saying J.P. Morgan is “good at both offense and defense,” he writes. The largest U.S. bank by assets has a “resilient” balance sheet and strong dividend level paired with its “unique self-help story” of expense savings giving the bank an “extra earnings lever.”

Mayo, notoriously outspoken on banks, also cited the bank’s market share gains in tough environments like Asia.

He maintains a $78 target. J.P. Morgan closed at $60 yesterday after falling more than 20% earlier in the day. It’s up more than 3% to $62.33 in the first minutes of trading today.

J.P. Morgan hit an all-time stock high above $70 earlier this summer.

9:47 am | Inflation outlook ticks up | by Min Zeng

The inflation outlook gauge in the bond market ticks up after falling to the lowest level since 2009 just a day ago as global markets stabilize.

The breakeven rate in Treasurys, or the difference between 10-year nominal notes and 10-year inflation-protected notes, is up 4 bps at 154 bps. That level suggests investors expect the U.S. inflation rate to run at an annualized 1.54% on average in the coming decade. Despite the uptick, the gauge remains far below the Fed's 2% target.

9:47 am | Fading already? | by Paul Vigna

Dow's up 297 points. I know I just said it, but I'm not sure I really want to see what happens if this rally fades quickly. It could get pretty ugly.

9:45 am | "Welcome to the PBOC put" | by Cynthia Lin

There's the Yellen put and Draghi put. Now there's the PBOC put.

The concept of a "central-bank put" refers to the reliability of those authorities stepping in when market tensions reach a boiling point. With the PBOC's rate cut after yet another stock-market rout, the PBOC revealed two things, say policy researchers at Cornerstone Macro: "First, that its pain threshold has been crossed. And second, and perhaps most important, that it is really no different from any other central bank--When things get hairy, it eases."

In fact, the PBOC put could be more powerful than that of the Fed, ECB or BOJ given that it has more policy tools at its disposal.

9:45 am | Sectors up for the morning, still down for the week | by Paul Vigna

Every sector is higher, obviously, and it's almost a mirror of yesterday. The sector's that fell the worst on Monday are rallying the most today. The sector's that had the narrowest losses yesterday, are seeing the slimmest gains this morning.

Utilities are up 1.4%, telecom 1.5%, industrials are up 1.9%. Every other sector is up by 2% or more, with tech up 2.7% and financials up 2.6%.

But looking over one column on our screen presents a different picture. The week-to-date change, and we're talking about one full session and about 15 minutes of a second one, is completely red. Every sector is still down. Interestingly, tech is down the least on the week, off 0.95% Energy is the worst, down 3.2%. Every other sector is down somewhere between 1.5% and 2.6%.

9:40 am | Dow's biggest point contributors | by Kristen Scholer

Shortly after the market open, the Dow 30 is up 352 points, on track for its biggest daily point gain since December. The blue-chip index is a price-weighted index, so components with the highest prices hold the greatest weights. Here are the biggest point contributors...

-Goldman Sachs Group Inc., the most expensive Dow stock, is adding 35 points. The stock is up 3%.

-Apple Inc., the seventh priciest component, is adding 33 points. Shares are up 5%.

-Walt Disney Co., the 10th highest-priced Dow stock, is adding 18 points. The stock is up 3%.

9:39 am | All sectors green | by Erik Holm

In sharp contrast to this time yesterday, all ten of the S&P 500 sectors are green. Energy is in the lead, up 2.4%. Information technology is up 2.1%. Consumer discretinary is up 2%.

9:37 am | Watch the ticks | by Paul Vigna

It occurs to me the real thing to watch for here is how long this move higher holds. To that end, and maybe this is nitpicking, but already noticed a couple of down ticks. Dow hit 270, then moved down to 250, then back up. Got over 300, around 330, moved back down to around 317, then headed back up. Got close to 400, now back down around 330.

Maybe that's too granular, but the point is that just because we're seeing a rebound after three days of brutal selling doesn't mean everything has changed. It hasn't, and the thing to watch for here are any signs of waning support.

Dow's now close to 400 points up again, up 380.

Now down to 344.

9:37 am | Best Buy leads the S&P 500 gainers | by Erik Holm

The biggest gainer in the S&P by a longshot: Best Buy. The company this morning posted stronger-than-expected second-quarter earnings and revenue driven by a 2.7% increase in domestic same-store-sales.

CEO Hubert Joly said the results are “affirmation that our strategy of offering advice, service and convenience at competitive prices is paying off.”

Best Buy said it doesn’t know if recent market volatility will impact consumer spending, but so far it has “not seen a measurable impact versus our original expectations.”

The shares are up 17% in the first minutes of trading

9:34 am | Mostly up | by Erik Holm

I see just three stocks down on the S&P 500. None more than 0.3%.

9:33 am | Dow up 300 points | by Paul Vigna

Dow up more than 300 points in the first two minutes of trading.

9:31 am | Four up arrows | by Erik Holm

Dow, S&P 500, Russell 2000 all up more than 1.5%. Nasdaq is up more than 3%.

9:30 am | Opening up | by Erik Holm

Moments after the open, the Dow is up 180 points. S&P up 25.

9:29 am | Elsewhere in the markets... | by Paul Vigna

The capital markets are certainly taking note of what’s happening in equities this morning. Here’s a quick rundown of where things stand just before the market opens for business in New York:

U.S. 10-year Treasury note yield: 2.08% (this was trading at about 1.94% this time yesterday)

German 10-year bund yield: 0.72% (this was trading around 0.53% this time yesterday)

Nymex crude (WT): up 3.6% at $39.65

Brent crude: up 3.5% at $44.19

Gold: down 0.6% at $1,147.40

Copper: up 0.04% at $2.30/lbs

Euro: down 1% against the dollar at 1.147

9:27 am | Two potential roadmaps | by Erik Holm

As the U.S. sets to open, a question some people are asking is whether this upheaval will turn out like 1987, when stocks eventually crashed before resuming their longer-term rise, or 1997, when an Asian financial crisis caused a shallower disruption that barely interrupted the U.S. bull market. Both of those events occurred without a U.S. recession, similar to today, when most economists see no sign of recession lurking.

Our E.S. Browning tackled that question in detail here.

9:24 am | All Dow 30 to open up | by Kristen Scholer

About five minutes before the U.S. opens, futures remain up with the Dow Jones Industrial Average set to rise by about 442 points. All 30 Dow components are higher. They biggest gainers are...

-Apple Inc. +5.9%

-Walt Disney Co. +4.9%

-J.P. Morgan Chase & Co. +4.9%

-Visa Inc. +4.9%

Helping Apple is an upgrade from Wells Fargo Securities analyst Maynard Um to "buy" Monday. Analysts at Cantor Fitzgerald and Nomura reiterated their bullish stances on the stock Tuesday. Recall, Apple is one of the "six stocks that matter" this year, and it saw steep declines initially when the broader markets started turning south.

9:24 am | "Why should now by different?" | by Matthew Cowley

"I have two problems with the ongoing global stock market sell-off," says Torsten Slok, chief international economist at Deutsche Bank Securities in New York, ahead of the start of trading on Wall Street Tuesday. "Betting against China has been a losing proposition for decades, why should now be different?" he asks. Secondly, he says he still hasn't seen a "smoking gun chart" showing why a slowdown in China will have a significant impact on the U.S. expansion.

"When uncertainty about corporate America reaches an all-time high because of '"something in China' then it looks like a buying opportunity to me; wait for your five-day moving average to stabilize and it will likely be a good entry point."

9:22 am | Virtu's outlook | by Bradley Hope

Virtu Financial, one of the world’s largest high-frequency trading firms, may be on track to beat estimates in the third quarter, according to a research note from Sandler O’Neill. With more successful trading days, quarterly earnings per share could rise 10% higher than expected, the note says.

Virtu CEO Doug Cifu told the Wall Street Journal yesterday that the firm had one of its best days ever on Monday, amid high volumes and volatility across the world. The firm may have netted as much as $5 million in net trading income, according to the note.

9:21 am | Monday in a word: "outlandish" | by Paul Vigna

Instinet's Frank Cappelleri put yesterday's rout into some interesting perspective: "The first few minutes of the day were some of the most outlandish in the market’s history."

The initial plunge, which took the Dow down 1089 points, was only a few basis points away from triggering the first circuit breaker, at 7%. "That, of course, would have temporarily halted all stocks and certainly added another layer of dread tothe trading environment."

Yesterday's trading range in the S&P 500, also, was on its own wider than the entire trading range from March through early August. "The SPX’s range on Monday was 98 points vs. 95 points for the prior trading range."

Given that massive swing, it's no surprise the market is seeing a snap back up this morning. "When volatility hits the market, it occurs on both sides of the tape. But large upswings - whether they last for a few hours like yesterday or longer - can rarely be trusted when taking place in the throes of this kind of trading environment."

In terms of support and resistance levels, he says with the recent selloff constituting such a big break, and with this apparent rebound, the market will be setting new technical levels. He suggests keeping an eye on 1954 on the S&P 500 (yesterday's trading high) and 1968 (a 38.2% Fibonacci level). He doesn't discount a move all the way up to the bottom of the former range, at 2040, "but the odds are that traders attempt to fade this pop somewhere before that.

"Again, if this market is going to resemble 2011," a point he made yesterday, "then we could be revisiting yesterday's lows at some point."

9:18 am | Rule 48 | by Corrie Driebusch

The New York Stock Exchange has invoked its “Rule 48″ again today. These headlines are just crossing the newswire:

*NYSE Invokes Rule 48 For Monday Stock Market Open

*Second Day in a Row Rule 48 Invoked

*Rule 48 Permits Market Makers On NYSE To Not Disseminate Price Indications Ahead of Open

*Rule 48 Makes It Easier To Open Stocks On Potentially Volatile Days

9:17 am | Goldman: Euro Treated As Safe Haven Asset | by Chiara Albanese

The euro is mirroring the yen in its trading against the dollar. This, says Robin Brooks at Goldman Sachs, means that the currency is being treated as a safe haven along with the yen. “It has always been the case that large risk-offs see markets push out lift off in the U.S., so the dollar tends to weaken against those places where [rates] are already close to zero, which is those places that are doing quantitative easing,” he says.

Mr. Brooks added that “there is no fundamental reason for the euro to rally.” The euro is now trading at 1.147 against the dollar.

9:16 am | J.P. Morgan's tactical moves | by Emese Bartha

J.P. Morgan Asset Management has made some tactical moves in the last three months to adjust positioning more conservatively, anticipating this recent volatility. It increased its allocation to cash, trimmed energy positions, reduced European high-yield exposure after the first half rally, and identified profitable emerging market shorts that were hedging the portfolio broadly, says Bill Eigen, chief investment officer for absolute return and opportunistic fixed income.

The focus in 2015 on increasing the fund's securitized exposure to provide steady income with low correlation to risk markets has helped reduce drawdown during this period, he says.

While maintaining a high cash balance to protect capital, J.P. Morgan Asset Management is ready to deploy into risk markets as opportunity presents itself, Mr. Eigen says.

9:13 am | Alibaba's fall | by Juro Osawa and Gillian Wong

A day after Alibaba’s stock price dipped below its initial public offering price for the first time, its chief executive in an open letter told employees to forget the company’s share price.

“Do not let the fog cloud your vision; broaden your horizons to see the bigger picture,” Daniel Zhang wrote in the letter issued Tuesday. “Forget about the stock price and put your mind at peace.”

Alibaba’s stock fell below its $68 IPO price for the first time since the e-commerce giant went public in the U.S. last September in a record-breaking $25 billion IPO . The stock fell 3.5% to $65.80 Monday, wiping out more than $5 billion off its market value.

With U.S. markets minutes from opening, the stock is back above the IPO price in pre-market trading. Shares were recently up 4.7% to $68.92.

But yesterday’s decline below the IPO price indicates just how much sentiment has changed over the past year for Alibaba and for Chinese Internet stocks.

CLSA analyst Elinor Leung in Hong Kong said Alibaba’s share price fall overnight reflected wider concerns about the global economy more than issues specific to Alibaba.

“The questions have been: ‘do you want to be in the stock market?’ and ‘do you want to be in China?’ instead of ‘do you want to be in Alibaba?’,” Ms. Leung said.

For more on Alibaba, see here.

9:09 am | Housing data in line, futures little changed | by Kristen Scholer

The S&P/Case-Shiller Home Price Index rose 5% in June, in line with expectations. U.S. stock futures and bonds are little changed following the release. Tuesday's other notable data will come at 10 a.m. EDT when July new home sales and Aug. consumer confidence are released.

9:04 am | Treasurys sell off | by Min Zeng

Demand for haven Treasury debt pulled back.

The selling sent the benchmark 10-year yield back above 2%, but some caution that trading in markets will continue to be volatile. Questions remain about how effective China’s policy will be, and so does uncertainty over whether the Fed may raise rates next month or wait longer to act. A $26 billion sale of two-year notes is due at 1 p.m. ET.

The yield on the 10-year note was 2.059% vs 1.997% Monday.

9:01 am | Bill Gross takes a hit | by Kirsten Grind and Gregory Zuckerman

Bill Gross’s bond mutual fund at Janus Capital Group Inc. suffered a 2.87% decline in its net asset value Monday, according to fund-research firm Morningstar Inc.

The drop is unusually large for a bond fund, according to people familiar with the industry. Mr. Gross’s $1.5 billion Janus Global Unconstrained Bond fund follows a strategy that allows it to invest in a variety of securities, unlike a typical bond fund.

“I have spent 25 years investing with managers across every asset class, and I don’t think I have ever seen a bond fund drop almost three percent in one day,” says Bradley Alford, chief investment officer at Alpha Capital Management in Atlanta, which manages mutual funds.

For more on the performance of the one-time "Bond King," click here.

8:48 am | Goldman: Fed less likely to act in coming weeks | by Erik Holm

Goldman Sachs doesn’t seem too worried about the recent stock-market tumble. The team at Goldman Sachs Asset Management is saying that the underpinnings of the global economy remain strong, even if markets “appear to be repricing risk.”

The firm says the risks of a U.S. recession remain very low and the data coming out of Europe are starting to look better. That, they say, matters more than what's happening in China over the long term.

But for now, they don't think the Fed is going to "take action in the coming weeks."

For more on Goldman's take on the recent volatility, click here.

8:42 am | Market check | by Kristen Scholer

About an hour before U.S. markets open, stock futures are pointing to a higher open with the S&P 500 and Dow Jones Industrial Average set to rise 42 and 387 points, respectively. If major indexes close there, they would see the biggest daily point gains since December. Yet, they still wouldn't erase Monday's steep losses when the S&P 500 shed nearly 78 points and the Dow 30 lost 588 points.

Biggest S&P 500 gainers premarket are Best Buy Co. +13%, Eaton Corp. +11%, First Solar Inc. +7.7% and Netflix Inc. +7.6%.

Meanwhile, the U.S. 10-year Treasury yield is up to 2.1% and WTI crude oil is recovering to $39.42 after falling to a six-and-a-half-year low Monday.

8:38 am | Not a sign of strength | by Paul Vigna

Because the market tends to take a, oh, let's call it unusual, view of things at times, it's worth highlighting something Edmund Moy, a former director of the U.S. Mint, just noted on Twitter:

China cuts interest rates for fifth time in 9 months. Not the sign of an improving economy. http://t.co/HzdOrsFesY

— Edmund Moy (@EdmundCMoy) August 25, 2015

8:33 am | Searching for any Fed tea leaves to arrange | by Paul Vigna

It”s a big week for Fed speakers, but not until Thursday, when the Jackson Hole confab starts. Until then, markets are scratching around for any tea leaves they can find.

It feel like a stretch to suggest that this rally is being built on top of Monday’s speech from the Atlanta Fed president, Dennis Lockhart, who’s prepared comments hit the Tape at exactly 3:55 p.m. They were too late to help Monday’s debacle, but it’s not impossible to think they’re helping on Tuesday.

Mr. Lockhart was still in the camp in favor of raising rates this year. But in Monday’s speech, he didn’t specify a date. Some in the market took that tea leaf and ran with it. “Market odds of September tightening have fallen from 50% to 24% and even some Fed insiders appear less certain about a September hike,” FTN Financial’s Chris Low wrote. “Atlanta’s Lockhart, for instance, said this week he favors a rate hike before the end of the year. A few weeks ago, he said he would vote to raise rates in September.” A few others we follow noted the exclusion of the word “September,” and we’re sure they weren’t the only ones.

But, Mr. Low countered, if the market remains stable, “Fed officials are likely to view recent turmoil as inevitable pre-tightening jitters,” which may not affect their decision.

Ed Yardeni, who runs the eponymous Yardeni Research, noted that back in October, when the market was having another taper tantrum at the prospect of QE3′s end, it was the St. Louis Fed president James Bullard who stanched the selling. On Oct. 16 he said in an interview that the Fed should consider extending the program. QE3 ended on schedule, but Bullard’s comments that day did swerve the market (this time around, though, Bullard may have exacerbated the selloff. He was interviewed Friday on Sirius, and suggested the Fed should stick to raising rates in September.)

“Where is James Bullard when we need him?” Mr. Yardeni mused. “The man can move markets.” If this morning’s move holds up, they may not need him.

8:30 am | 'Expect volatility' in weeks ahead | by Kristen Scholer

Amid the wide price swings stocks have seen recently, Bespoke Investment Group crunched data on what happens after the S&P 500 books three straight days of declines of 2% or more. In sum, it says "extreme moves" continued in the near term -- a day, week and month after the event.

Only 18 times since 1928, including the three-day losing streak ended Monday, has the large-cap S&P index witnessed three consecutive sessions of losses of 2% or more. The average returns a day, week and month are positive. But performance remained volatile in the sessions that followed...

"Expect volatility in both directions in the days and weeks ahead," wrote Bespoke.

8:21 am | Hollande: Confident China can surmount crisis | by William Horobin

The volatile markets have certainly registered with Europe's leaders. ECB vice president Vitor Constancio pointed out in a speech earlier Tuesday that the central bank stood ready to use all instruments available in case of a material change in the inflation outlook. In addition, French President Francois Hollande expressed confidence China can find a solution to the crisis that has rocked global financial markets in recent days.

"I am confident Chinese authorities can surmount this market crisis," Mr. Hollande said. "They have the means to act," he added. He noted that Chinese economic growth remains at an "enviable" level, even if it has slowed.

8:13 am | The 'numbahs' are suspended until further notice | by Paul Vigna

Joan McCullough, a long-time market denizen, runs the one-woman shop Longford Associates and every day at the top of her morning note, she provides the "numbahs," as she calls them colloquially, the resistance ("R") and support ("S") levels for the S&P futures. This was what appeared at the top of this morning's note:

Numbahs

R=

Pivot:

S=

"Like alternate side of the street parking," she wrote, "the Daily Numbahs are suspended. Until they are helpful again."

She was doing it to make a point, of course, that when the market is trading this maniacally technical analysis is severely crimped, if not entirely useless. Point made, she did provide a few milestones to keep an eye on, "only because the other boys have the same script."

The first level to keep an eye on, she said, is 1923. "And see to it that they can hold it." If the market hits that mark, the next resistance would be 1934. "Again, we want to see them able to ascend. And maintain altitude." If those levels are held - and futures trading right now has the index at 1944 - then there's a "vacuum" up to the 1970-75 range. If all that happened, the market would be back where it was on Friday, for whatever that's worth.

"Good luck. And may we soldier together again one day. Holy smokes."

8:07 am | It's the economy, of course | by Mark Magnier

China's move Tuesday to simultaneous cut interest rates by a quarter percentage point and pare required bank reserves reflects a bid to supporting the economy after their efforts to prop up the stock market ended "in tatters," said Capital Economics in a research note.

"The move may halt the market slide, but we suspect the primary motivation is to shore up confidence in the state of the wider economy," Capital Economics said. "It should add to the tailwinds supporting economic growth in the second half of the year," the research group said.

8:05 am | From anger to despair | by Shen Hong

Faced with a brutal stock-market decline, the mood among many Chinese investors has shifted from anger to despair.

“Things are getting really complicated now,” said Tong Genshen, an 80-year-old retiree from a state-owned tobacco firm in Shanghai, who was trading stocks at a dimly-lit but crowded local-brokerage here. He said Monday’s stock-market decline was triggered by Wall Street on Friday, but by Tuesday he said, “we don’t even know who to blame now.”

And Gu Yuan, an employee of an Internet firm in Shanghai, said he was increasingly skeptical of the government’s ability to handle the market rout.

“I was terrified by how messy government interventions have been,” Mr. Gu said, calling Shanghai “not a normal market environment.” He added: “I’d rather be a spectator of China’s stock market than a participant from now on.”

For more Journal coverage from Shanghai, click here.

7:55 am | The cruel psychology of the 1,000-point drop | by Jason Zweig

As the financial blogger Ben Carlson pointed out this past weekend, sharp drops in the market transfix our attention, with short-term losses overshadowing our awareness of longer-term gains.

Crimson arrows pointing down, pundits shrieking on financial television, stock-market charts flickering like monitors in a hospital emergency room: all these indicators make what is happening in the short term seem perfectly clear. But if you form long-term investing plans based on them, you will be sorry.

We all long for certainty, some kind of chime or singing telegram that would tell us exactly what to do. After all the drama of the past few days, stocks are a little cheaper than they were before. They could get a lot cheaper still before this is over.

But as I wrote in a column late yesterday, you shouldn't let anyone fool you into thinking that history or mathematics can identify some exact entry point at which you can know you’re buying back into stocks at a bargain level. The future is uncertain, but so is the past.

In order to capture the potentially higher returns that stocks can offer, you have to reconcile yourself to the certainty of horrifying short-term losses. If you can’t do that, you shouldn’t be in stocks—and shouldn’t feel any shame about it, either.

7:53 am | Wall Street, you're clouding the message | by Paul Vigna

If the market wanted to send the Fed a message yesterday (don't raise rates, please!), it's totally undercutting that message today. Rallying by 500 or 600 points a day after tumbling by nearly 600 points tells the Fed the market is just doing its own crazy thing, and the central bank doesn't need to worry about it.

Wall Street, you're messing this up. You want to send a message? Look at China. Shanghai's down 22% in four sessions. That's a message.

Okay, that's a bit facetious. There is absolutely nothing normal about seeing blue-chip indexes convulsing like this. There is a larger picture here that is coming into view. But in the immediate term, its' a little easier: what you need to look for is how much oomph this initial rally has, because as much as we like to say the market has no memory from day to day, it does. The carnage of the past week, the global nature of the selloff, those things won't just disappear because some traders are trying to stage a rally. Remember, these are traders. They could make a Geico commercial about them ("If you're a trader, you trade. It's what you do"). What matters is where the pressure is, and until proven otherwise, the pressure is still pushing down.

One problem for traders is that all the support levels have been broken, said JC Parets, president of Eagle Bay Capital, which now become resistance. "To me, this is a sell rips sort of market, not a buy the dips," he wrote in a blog post. "Remember, it’s all a matter of defining your time horizon and risk tolerance. From an intermediate-term perspective looking out weeks and months (like I do), this is the environment that I believe we are in."

7:46 am | Volatility may be here to stay | by Kristen Scholer

As we detail in our Morning MoneyBeat column, these dramatic swings in the market probably aren’t going to disappear overnight.

“When this type of two-way volatility first appears, it tends to stick around for longer than a few days,” said Frank Cappelleri, technical analyst at brokerage Instinet.

Managing director at MND Partners Tim Anderson, for one, is of the mindset that volatility will remain until there’s clarity on China and the foreign currency market stabilizes.

“Big global investors have lost confidence into what really is the state of the Chinese economy in terms of their growth rate and what we should be looking at in terms of their growth rate this year and next,” he said. “Nobody believes they’re growing at 7%.”

In Monday’s session, investors saw the CBOE Volatility Index, or Fear Gauge, spike as much as 90% to 53.29. The index ultimately settled at a lower level of 40.74, but that still puts it near its highest point in about four years.

7:41 am | Data ahead | by Patrick Sullivan

Whether the Fed will lift interest rates next month amid the volatile market trading remains the big question, and today we get some more data that the Fed will look at when making its decision. Home prices come in at 9 a.m. New York time, and consumer confidence and new home sales are at 10 a.m.

7:37 am | Copper is up too | by Ese Erheriene

Copper futures are higher on the London Metal Exchange, trading up 1.6% at $5,029.50/ton after the surprise interest rate cut by the People's Bank of China. The red metal jumped $70 to trade above the psychologically important $5,000 level again.

Expectations of stimulus by the China had kept prices afloat earlier in trading, following the global market meltdown in the previous session. Going forward, it's demand outside of China that's seen posing problems for the red metal.

"Recent data suggests a stabilization or even improvement in Chinese demand. However, ex-China emerging markets look to be a bigger concern for future demand, following the currency moves and capital flight seen," says Macquarie in a note.

7:34 am | Macquarie: China fears overdone | by Grace Zhu

China's cuts in interest rates and banks' reserve requirement ratio suggest the nation's leaders are serious about achieving their economic growth target of about 7% for this year, says Macquarie economist Larry Hu. He says the cuts will boost global financial market sentiment and China's economic fundamentals, which have shown signs of weakness recently. The liquidity unleashed by the cut in the bank reserve ratio may also offset recent capital outflows, Hu says. The economist adds that fears that China's economy is heading for a hard landing are overdone.

7:30 am | From worst to best | by Josie Cox

Having Monday suffered its biggest fall in percentage terms since December 2008, Tuesday could see the Stoxx Europe 600 rise more than it has on any other day since 2011 -- or even longer. The Stoxx Europe 600 is currently up 4.6%. The last time it rose more than 4% on one day was almost five years ago, according to FactSet data. It rose 4.4% on September 27, 2011.

7:30 am | All the arrows are green | by Erik Holm

With two hours until U.S. stock markets open, all the arrows are pointing up. S&P futures are 70 points higher, Dow futures are up 570, and Nasdaq futures up about 170. The dollar is stronger against the yen and euro. Emerging market currencies generally look stronger. Oil is up almost 3%–though still under $40 a barrel in the U.S.

6:49 am | China Central Bank Cuts Rates

The Chinese central bank has cut its interest rates by one quarter of a percentage point, and says it will lower the amount of capital banks need to keep in reserve. The People's Bank of China added that the reserve cuts were to ensure liquidity and credit growth.

6:40 am

6:30 am | European Stocks Extend Gains | by Josie Cox

Stocks across Europe are extending gains after Chinese authorities announced a fresh cut to benchmark interest rates. The Stoxx Europe 600 is now up 4%. London’s FTSE 100 is up 3.2%, Germany’s DAX up 4% and France’s CAC up 4.1%. Futures contracts shows the U.S.’s S&P 500 opening 3.6% higher.

5:50 am | PineBridge Is 'Nibbling' | by Christopher Whittall

Some investors are licking their lips following China’s stock market selloff. “I’m quite happy, it takes away all of the excess we saw in the China market before,” says Elizabeth Soon, a portfolio manager at PineBridge Investments, which oversees $78 billion in assets.

Ms. Soon said Chinese stock valuations are now at 2003 lows on a price to book basis. “What we have seen since Friday is panic selling: investors don’t want to own anything related to Asia or emerging markets, regardless of whether it’s a good company or a bad company,” she says. Ms. Soon said she is beginning to buy stocks slowly, highlighting opportunities in property stocks and some technology companies. “All sectors have sold down so badly, we’re looking to nibble across the region,” she said.

5:42 am | Risk Management Remains Carmignac's Top Priority | by Christopher Whittall

"At this stage, we are talking about an economic slowdown, not a meltdown. But the markets are vulnerable," says Didier Saint-Georges, managing director at Carmignac, which oversees €58 billion in assets.

Mr. Saint-Georges says investors' loss of trust in the Chinese authorities, whose management of the stock market bubble has been "pitiful", should not be underestimated as it "is critical to capital flows."

In the bear scenario, he said, investors would not only lose faith in China, but also in global central banks' capacity to support asset prices and economic growth. This has led him to put in place a "very cautious" hedging policy over the past few days, he says. "The immediate priority is risk management," he says.

5:21 am | Target U.S. High-Yield Debt - BNP Paribas | by Dominique Fong

Like many other strategists, BNP Paribas’s Colin Graham has created a shopping list of assets to buy as the global rout tapers off. “Global growth is going to be fine, China is going to have a soft landing, therefore GDP growth is okay,” said Mr. Graham, a chief investment officer of multi-asset solutions for BNP Paribas Investment Partners.

The firm already sold its position in emerging market debt. Now Mr. Graham is considering buying U.S. high -yield debt, which offers a yield of about 7%, or slightly below that excluding the energy sector, he says. The U.S. dollar cycle isn’t going to change because the U.S. is still on a “sound foot.”

“We’re going to continue to step out of this,” Mr. Graham said about the market swings. “We’ve seen the high point of volatility. Through to the end of this year, we will continue to see market stresses.”

5:00 am | It's 2015, not 1997 - UBS | by Giles Turner

So things have been pretty bad for Asian stock markets recently. However, analysts at UBS are keen to point out that we are some way off the 1997 Asian financial crisis.

“Sure, there are strong similarities between current developments and 1997,” they note. “household debt levels are uncomfortably high in some Asian countries, currencies are plummeting, and a political crisis in Malaysia removed the deputy prime minister.”

However, today Asian balance sheets are healthier, and falling currencies have “acted as shock absorbers, cushioning the real economy as the US dollar strengthens while complementing pro-cyclical domestic policies.”

So while it is great that we are not back to 1997, life is still tough for Asian investors in 2015.

4:42 am | Dollar Pressure From "Every Corner" | by Chiara Albanese

The pressure on the dollar is coming “virtually from every corner of the developing FX market,” says Stephen Gallo, at Bank of Montreal, as expectations for monetary policies in the U.S. and emerging markets head in opposite directions.

This has increased the market volatility, with the increase led by Asian currencies, in particular the renminmbi. “Chinese growth anxiety has a lot to do with the recent sharp falls in commodity prices and commodity-linked currencies,” says Mr. Gallo.

4:28 am | Vietnam and the Philippines: Safe Havens In Regional Storm | by Trefor Moss

Vietnam and the Philippines are well set to ride out the period of uncertainty stemming from China’s slowdown, economists believe.

While trade growth has generally stalled thanks to weak Chinese demand, Vietnam has bucked the regional trend, successfully growing its exports 9% year on year, said Christian de Guzman of Moody’s Investors Service, thanks to earlier currency devaluations and to an impressive ability to attract foreign investment.

“Vietnam seems resilient to the pressures across the region. Export data everywhere have been looking very poor, but Vietnam has been growing exports 9% year on year,” Mr. de Guzman said. “One reason is that they have capitalized on shifts in the regional supply chain: plants that were in China or Thailand are now shifting to Vietnam. An increasing share of the region’s mobile phones and other electronics are being produced there now.”

The Philippines, meanwhile, is relatively well insulated from Chinese instability, with only around 12% of Philippine exports going to China last year, and with trade with China having declined as a proportion of Philippine GDP to less than 3% in 2014.

“In Asean, the Philippines is the economy that will likely be least exposed to external pressures,” said Eugenia Victorino, an economist at ANZ Research. “Household consumption accounts for almost 70% of total GDP, the highest in the region.” Two key drivers of the Philippine economy – overseas remittances, and the outsourcing sector – remain healthy, she noted, meaning that any drop-off in Philippine trade with China should only have a negligible effect on the economy as a whole.

However, the Philippines has so far failed to emulate Vietnam and capture a higher share of regional FDI, with investors adopting a wait-and-see approach ahead of presidential elections in mid-2016, Mr. de Guzman said.

4:21 am

4:21 am | Don't Panic - Says China | by Grace Zhu and William Kazer

As China’s stock markets continued to swoon, the government was telling investors not to panic by highlighting data that showed the economy was weak but not cratering. It offered an unusually early view of electric power output – a key datapoint that has often proved to be a better gauge of economic activity than the headline gross domestic product number. The nation’s power production rose 4% in the first 20 days of August compared with the same period a year ago, according to the state planning agency.

The figures suggested that electric power production — and the economy overall — may be stabilizing. In all of July, power production and consumption declined 2% and 1.3% respectively from a year earlier. The National Development and Reform Commission said in a statement that the drop in July electricity consumption was mainly due to declines in demand from steel and construction materials producers. It added that power consumption in the services sector grew “relatively fast” in July.

The figures seemed to conflict with another recent datapoint — the preliminary Caixin China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, which fell to a 77-month low in August, according to data released Friday. Investors appeared to be in no mood to take chances on market direction, however. Shanghai’s main stock index finished the day down 7.6% after Monday’s 8.5% loss.

3:57 am | by Chao Deng

The Shanghai Composite Index has lost 22% in the past four trading sessions, after closing 7.6% lower Tuesday at 2964.97.

The smaller Shenzhen market has also slid for four straight trading sessions.

The two markets together have lost about $1.2 trillion in market capitalization over that time period, according to Factset.

3:46 am | 'There Is No Bottom for the Market"--Trader | by Chao Deng

Shares in Shanghai take a deep dive in the afternoon session, falling as much as 8.2% and breaching the psychological 3000 level.

Once again, there was an apparent lack of government support.

One trader at a large domestic brokerage in Shanghai attributed the losses to unwinding of margin debt not only at brokerages but also at funds offered by domestic mutual funds that have allowed investors to lever up their bets in the market.

Because of Shanghai's 8.5% drop on Monday, the market consensus is that these funds could see around 20 billion yuan ($3.12 billion) worth of stocks being redeemed Tuesday and Wednesday, he says.

“At this point, there is no bottom for the market. The selling will finish once everyone who wants to get out of the market has a chance to get out,” he says.

3:40 am | European Mining Stocks Rebound | by Josie Cox

The Stoxx Europe 600 sub-index of mining stocks is rebounding strongly on Tuesday, mirroring a bounce-back in the price of oil, following a sharp selloff Monday. The index is 3.7% higher led by BHP Billiton, up 5.6%, Antofagasta, up 3.8%, Anglo American, up 3.7% and Rio Tinto, up 3.3%.

3:38 am | Emerging Market Currencies Stage Tentative Recovery | by Josie Cox

Emerging-market currencies are generally recovering after a sharp selloff on Monday. The Russian ruble is 1.6% higher against the U.S. dollar, the South African rand is up 0.7% and the Turkish lira is up 0.6%. All fell sharply against the buck Monday and are still sharply lower so far in August. Brent crude is 2.0% higher on the day at $43.54 per barrel.

3:14 am | China's Property Developers | by Fiona Law

Bond prices for Chinese property developers appear to be holding up as investors believe the sector's financial strength has improved and the selloff was overdone. Yields of Shimao Property Holdings Ltd., for example, have kept steady from Monday.

On Tuesday, Morgan Stanley upgraded China’s property bonds to equal-weight from underweight. Since the beginning of the year, many home builders have been able to issue onshore bonds as part of Beijing’s campaign to ease lending. That should help improve liquidity.

3:13 am | Shanghai Closes Down 7.6% | by Gregor Stuart Hunter

The Shanghai Composite Index closes down 7.6% at 2,964.97, while the Shenzhen index ended 7.1% lower at 1,749.07. The ChiNext was off 7.5% at 1,990.71.

3:09 am | European Stock Markets Open Higher | by Josie Cox

Stock markets have opened in Europe and the picture is refreshingly green. The Stoxx Europe 600 is up 1.6%, London’s FTSE 100 is 1.5% higher, Germany’s DAX is up 1.6% and France’s CAC is 1.7% higher. In fact, all major country indexes in Europe are currently in the green.

3:02 am | Asia's Corporate Bonds Steady | by Fiona Law

Asia’s corporate bonds have regained footing as some regional stock markets stabilized Tuesday (though China and Japan are big exceptions). In the throes of the Monday’s selloff, investors turned to some of their most liquid assets to cover losses elsewhere. Now, they’re starting to buy again.

Yields of investment-grade dollar bonds issued by China’s biggest state-owned companies, such Sinopec, and banks like Bank of China, fell by an average of 0.05 percentage point. Yields fall when prices rise.

Even Southeast Asia’s embattled oil and gas companies are showing some signs of relief. Yields for an eight-year dollar bond of Indonesian state-owned oil and gas company Pertamina fell 0.07 percentage point to 5.52%, while the yield for a seven-year dollar bond from Malaysia’s Petronas stabilized at 3.54% after rising for 0.07 percentage point Monday.

Morgan Stanley says it remains positive on Asia’s investment-grade issuers because a weak yuan should discourage overzealous borrowing. Many issuers loaded up on debt when the yuan was strengthening because that made borrowing costs lower.

But investors aren’t ready to pile on risk yet. High-yield bonds are still soft. The yield for China Oil & Gas Group Ltd. inched up to nearly 8%.

2:53 am | Takeaways From Goldman Sachs Asset Management | by Josie Cox

Goldman Sachs Asset Management published a note this morning that highlights its three takeaways from the global selloff. First, it considers the risk of a U.S. recession very low, considering the pace at which the economy is still expanding. However, (and this is its second takeaway) it argues that recent events may make the U.S. Federal Reserve less likely to take action in the coming weeks. Third, GSAM says the selloff shows that investors should anticipate higher volatility, especially in equity markets, for some time to come. “We view recent events as a reminder that localized pressures can cascade into global markets in ways which have been rare during the last few years’ below-average volatility levels,” GSAM says.

2:51 am | Tech Glitch Hobbles Philippine Exchange | by Cris Larano

Hours after the Philippine Stock Exchange stopped trading, it has yet to resolve its technical glitch. The benchmark PSEi was last down just 0.1% after dipping as low as 2.8% earlier.

2:49 am | Shanghai Down 8%, Nearing the Close | by Gregor Stuart Hunter

Selling in the Shanghai Composite accelerated towards the close after breaching the 3,000 mark; the benchmark was last down 8% at 2,952.11.

2:45 am | Futures Point to Gains in Europe | by Tommy Stubbington

Stock futures in Europe are higher ahead of the open, as some signs of stability appear in global markets after Monday's big selloff. Stoxx Europe 600 futures are up 1.6%, German DAX futures climbed 1.4% and in the U.K., FTSE 100 futures are 1.5% higher. Of course, given the speed of moves we've seen over the last 24 hours, this could quickly change.

2:20 am | India Shares Erase Early Gains | by Debiprasad Nayak

Indian shares erase early gains as selling by foreign investors and concerns about overvaluation weigh on the sentiment. The benchmark S&P BSE Sensex slips 1.3% to 25,416.52 after rising as much as 1.5% in early trade.

2:17 am | Shanghai Falls Below 3000 | by Gregor Stuart Hunter

The Shanghai Composite falls 6.6% to 2,997.62, dipping below 3000 for the first time since December. The ChiNext was last down 7.5% and has fallen more than 50% from its high in June.

2:08 am | Nikkei Closes Down 4%

Nikkei closes 4% lower at 17806.70, its lowest level since Feb. 10.

2:00 am

The Shanghai Composite just grazed the 3,000 mark. The benchmark is off the bottom but still down 5.9% with a new session low of 3,000.86.

— Gregor Stuart Hunter (@gregorhunter) August 25, 2015

1:57 am | Midafternoon Selling Sends Many Asia Markets Down | by Gregor Stuart Hunter

There is a renewed burst of selling in the mid-afternoon, and China has been hit hard. Many other markets that had been faring well are now down. China is bearing the brunt, with the Shanghai Composite last down 6.4%, while the smaller Shenzhen market falls 7%. Japan’s Nikkei 225 Stock Average was last down 3.2% at 17,973.17, while in Hong Kong, the Hang Seng Index fell 1.6% to 20,907.27. Hong Kong listings of mainland companies, known as H-shares, are down 3%. The survivors of the selloff so far are Korea’s Kospi, which remains up 1%, and Australia’s S&P/ASX is 2% higher, while the Taiwanese Taiex is surging 3.6%. For now, anyway.

1:51 am | Nikkei Reversal Hints That Risk Aversion Is Returning | by Ewen Chew

There are signs out of Japan that risk aversion is far from over, despite a broad recovery in regional risk assets early Tuesday. The strengthening of the Japanese yen--used as a cheap funding vehicle to leverage into high-yield currencies--coupled with the stock market's turnaround toward weakness, are raising alarms. From an intraday gain of 1.1%, the Nikkei is now down 2.7%. Meanwhile, the yen strengthened 0.7% against the U.S. dollar from around 120.00 to its current level of 119.17. Other stock markets have retreated from their intraday highs, while embattled Asian currencies such as the Malaysian ringgit and the Indonesian rupiah are again flirting with multiyear lows compared with the U.S. dollar.

1:45 am | Nikkei Reverses in Late-Session Trading | by Gregor Stuart Hunter

The Nikkei 225 Stock Average was last down 2.5% at 18,075.33.

1:33 am | Is BOJ Taking Laissez-Faire Stance to Selloff? | by Kosaku Narioka

If the Bank of Japan's purchase of exchange-traded funds are any guide, the Japanese central bank may be taking a laissez-faire approach to the latest Japanese market selloff. While selling momentum eased somewhat, the Nikkei has lost 9.9% so far in August, which is on track to become the biggest percentage fall since May 2012. In June, when fears grew about Greece's potential exit from the euro zone and China's stock market started to collapse, the BOJ bought 443.1 billion yen worth ($3.7 billion) of stocks. In August, it has bought 268.3 billion yen so far, through Monday. Many market participants say there aren't clear drivers for the latest selloff other than ambiguous China concerns.

1:31 am | Don’t Get Fooled by the Green on Your Screen | by P.R. Venkat

“This morning’s strong bounce is broad-based and encouraging. However, a market rebound of 2%, 3%, 4% or even 5% are common tales” after deep losses, wrote Singapore based Nicholas Teo, a market analyst at CMC Markets in a note.

For seven years, the world’s financial markets have been “intoxicated by the lure of cheap money and traders enjoyed its spoils,” he said, referring to a period of ultralow interest rates around the globe that eased borrowing and drove some stock markets to even 15-year highs. But economies weren’t growing enough to warrant such rapid stock gains--with global growth expected to average between 2%-3% this year. The past week’s selldown suggests that more pain could lie ahead for global equity prices.

Bets that the Federal Reserve will raise interest rates have shifted to December from September, according to futures markets. “This could either buy everyone more time at the party, or put off the pain that markets need to eventually face up to in accepting a new paradigm of mediocre growth,” Mr. Teo said.

1:26 am

Colleague Wayne Arnold at Barron's Asia says market turmoil presents a buying opportunity:

"When this column lamented last month that Asian stocks were overvalued, this is not the reaction I had in mind. The breathtaking correction of the past week has now turned many of the region's markets into screaming bargains."

1:20 am | South Korea's Kospi Is Up Ahead of Close | by Kwanwoo Jun

South Korea's benchmark Kospi index is up 1.5% just an hour ahead of Tuesday's close.

1:13 am

China's stock markets tumbled on Monday. You won't find a single mention in the People's Daily on Tuesday. pic.twitter.com/6kRlc5M00b

— Chris Buckley 储百亮 (@ChuBailiang) August 25, 2015

1:12 am

US futures +2% mid-day here in Asia pic.twitter.com/ZYQpd9XRMc

— China Stock Research (@ChinaStockRsrch) August 25, 2015

1:11 am

Get out the Champagne (maybe Bernadino), the NZX has closed up 6 points tonight!

— Grant Davies (@G_T_Davies) August 25, 2015

1:06 am | U.S. Market Selloff a Feast for Australian Stock Picker | by Vera Sprothen

As stock prices plummeted from Asia to the U.S., some Australian investors finally jumped in to buy. John Abernethy, chief investment officer at Clime Asset Management in Sydney, said he had been holding up to 60% of his international fund's share portfolio in cash in anticipation of a market correction. On Monday, when a global selloff gripped U.S. stocks, Mr. Abernethy used some of his cash to buy into several popular companies at a steep discount, including Apple, Roche Holding, Berkshire Hathaway and NetEase. He says quantitative easing had pushed up valuations and made share markets ripe for a downturn. Now that it has happened, Mr. Abernethy says it is time to "pick the eyes out of the stock market in America."

12:56 am | A Power-Up for China's Economy?

One way of gauging how China's economy is doing is to examine electricity figures. The country's economic planner just announced China's power production rose 4% in the first 20 days of August compared with the same period a year ago.

The figures, from the National Development and Reform Commission, suggest that electric power output -- and the Chinese economy overall -- may be stabilizing. In all of July, power production and consumption declined 2% and 1.3% respectively from a year earlier, pointing to softness. July's drop in electricity consumption was mainly due to declines in demand from steel and construction materials, the commission said.

The planning body said slower industrial production was mainly due to declines in the auto and steel sectors, while high-tech and consumption-related production maintained "relatively high growth." It also said that investment growth still has momentum as more new projects will be launched and more money will be put in place to fund these projects.

12:52 am | Nikkei's Wild Tuesday Ride | by Gregor Stuart Hunter

If China’s markets have proven a little too predictable today, try Japan.

The Nikkei 225 Stock Average has been having a roller-coaster day, having hit lows of 4.3% after the open before rising as high as 1.6%.

That followed a surge in the strength of the yen overnight to session lows of 117.22 against the U.S. dollar. A lower yen indicates strength because of the way the currency is usually quoted.

The Japanese equity benchmark took another tumble after the lunch break and was last down 1.3% at 18,304.30, its lowest level since February, while the yen last weakened to 119.80.

12:50 am | China's Market Rout Could Slow One of the Region's Funding Spigots ... But Isn't the Only Problem | by Ben Otto

In the past year, China has angled to become one of the region’s biggest lenders and investors, even setting up its own infrastructure bank to help fund projects across Asia. Now, its latest stock turmoil and stronger hints of an economic slowdown are casting doubt on whether China will pay out the billions it's promised to neighbors for infrastructure spending.

"It’s hard to say funding will suddenly be frozen on their side just because of the currency turmoil, but things are probably going to go slower than desired," said OCBC economist Wellian Wiranto. "There are plenty of other issues to occupy Chinese policymakers’ mind now."

Indonesia’s President Joko Widodo has secured tentative promises for tens of billions of dollars from Beijing to build up power plants and railways. But there’s an added layer of difficulty there: getting projects past local red tape, Standard Chartered economist Eric Sugandi added.

"Turbulence in China’s economy may affect its ability to provide financing, but the main problem lies on the ability of the Indonesian government to expedite infrastructure spending," he said. "The committed funding is there, but it does not mean anything if the projects are not running."

12:46 am | Will China Market Selloff Threaten Beijing's Reform Plans? | by William Kazer

A Chinese government newspaper warned that a loss of investor confidence after the market selloff could threaten China's economic reform program. The Securities Daily, one of the smaller official securities publications, also said the government needed to step up its intervention and added that it might have to maintain support over a longer period of time. In a front-page commentary headlined "Destroying Investor Confidence Could Threaten Entire Reform Program," it said the government should ignore foreign criticism of its rescue effort and move quickly to stabilize the market amid a growing climate of despair. "Under the current bizarre circumstances of a market bent on crushing itself, measures are needed to restore market order, or there will be serious damage to the reform program." The article, which also said China's economic fundamentals were solid, was written by Dong Shaopeng, deputy editor-in-chief of the newspaper, which is owned by the state-run Economic Daily.

12:41 am | What's Going on With Copper Prices? | by Biman Mukherji

Why are copper prices falling despite a recent rise in imports by the world’s largest consumer?

China’s copper imports rose by 2% month-on-month and 6% year-on-year to 260,000 metric tons in July after posting declines in June.

The metal, which shows up in everything from electric cables to household appliances, has become a proxy for Chinese consumer demand, so rising imports should be a sign of better days ahead.

Still, the broad strokes of pessimism in Chinese stocks have taken over, says Eugen Weinberg, head of research at Commerzbank. “If you sell copper now, you may be betting on the same developments as Chinese equities,” he adds.

Three-month copper price on the London Metal Exchange are now at $4,983 a ton, close to a six-year low and below the psychological level of $5,000 a ton.

12:31 am | China's Economy Remains a 'Black Box'

China’s economy is difficult to assess amid murky politics, unreliable data and opaque decision making, write the WSJ's Greg Ip and Bob Davis:

That opacity lately seems to have backfired. Officials’ interventions on the stock market have appeared ineffective, and on the exchange rate contradictory. That preoccupation with internal stability is a factor the rest of the world will have to weigh in watching China’s actions.

While China is more transparent than it was a decade ago, and no worse than some other countries whose troubles have roiled world markets, such as Mexico or Russia, the difference is size, they say: China accounts for 15% of global economic output.

12:29 am

So what resembles the China stock market chart? Searches for "stock market" on Baidu pic.twitter.com/xSJcE2Dns5

— Jacky Wong (@jackycwong) August 25, 2015

12:21 am | Malaysia Worriers Need to Buck Up | by Saurabh Chaturvedi

Malaysian shares rebound and the currency is looking up, and Stuart Allsopp and Andrew Wood from BMI research think the recent selloff was overdone. Malaysian shares have dropped about 12% since the beginning of the year and the ringgit is down about 17%, but the two analysts say the market turmoil says little about the country's economic fundamentals, which remain robust. The selloff is largely a reaction to investor concerns about China's economic downturn and share-market tumble, but such concerns are "out of proportion," says Mr. Wood, head of Asia country risk research at BMI.

12:18 am | Stocks Are Up Down Under | by Robb Stewart

The red that again bathed Australia's equities market early in the session has been scrubbed clean and replaced by gains across most industry sectors, led by a rebound in banks after Monday's steep falls. The ASX 200 is up 2.1% at 5103.7, taking back a chunk of Monday's 4.1% dive to a two-year low.

12:12 am

#NZX50 is up for the day. #TurnaroundTuesday

— Grant Davies (@G_T_Davies) August 25, 2015

12:05 am | How Gold Got Its Shine Back | by Biman Mukherji

China’s stock market plunge has completely turned on its head one of the biggest bearish bets this year: gold prices.

A pending rise in U.S. interest rates and a stronger dollar would dull the appeal of gold, which gives off no income and costs money to hold. That's why many analysts had forecast a cap on gold's gains, despite the volatility tipped off by China's move to weaken its currency.

That bet is now completely off the table as the rout in global stocks has enhanced gold’s haven appeal, says Howie Lee, analyst with Phillip Futures. Gold prices are expected to rise even if the Fed goes ahead with a rise in interest rates, which is expected to upend stock markets. Gold is trading marginally higher Tuesday at $1,153.50 an ounce after hitting a six-week high on Monday.

11:59 pm | Indian Shares Recover | by Debiprasad Nayak

Indian shares recover as investors start buying stocks at lower levels after Monday's fall. The S&P BSE Sensex is up 1.2% at 26,038.91, while the National Stock Exchange's Nifty index rises 1.4% to 7,916.20. The rupee is trading at 66.43 against the dollar, compared with Monday's close of 66.64.

11:54 pm

Is Korea less vulnerable? Foreigners sell a net 0.36% of market cap. in Korea vs 0.51% in Taiwan, 0.49% in Thailand and 0.51% in Malaysia.

— Kwanwoo Jun (@Kwanwoo) August 25, 2015

11:51 pm | by Gregor Stuart Hunter

Diving 8.5% Monday, #ChinaStocks lost 6.4% at opening, tumbled another 4.3% at midday Tuesday amid global market rout pic.twitter.com/3MqLkbH3V6

— China Xinhua News (@XHNews) August 25, 2015

One subplot in the China market rout has been the increasingly surreal depictions of the selloff in Chinese state media outlets.

It wasn’t immediately clear what Xinhua was getting at in this latest illustration posted to Twitter this morning (a Black Swan event? A liquidity crisis?) but it is clearly the stuff of nightmares.

11:23 pm | Economists: Investors Overreacted to China Fears | by Dominique Fong

Investors overreacted to fears about China, economists say. For one, diving stock prices “tell us next to nothing” about the state of China’s economy, writes Mark Williams of Capital Economics in a report. Surging Chinese stock prices were never tied in the first place to the actual growth of listed companies, he argues, so a selloff doesn’t mean economic growth is suddenly dropping off a cliff. Economists are simply putting a lot of faith in Chinese policymakers, who supposedly will “defend” and “do whatever it takes” to achieve their goal of 7% gross domestic product growth for the year. Besides, China has the policy ammunition to force it to happen, with room to lower the 4.85% interest rate, cut the limit to deposits banks must hold on reserve, and increase government spending on infrastructure projects. Bets are on that China’s growth will pick up soon. “That probably won’t translate into a turnaround in China’s equity markets but, given the lack of a link between the markets and the economy and the lack of global exposure to China’s markets, it’s not clear why that should matter to most investors,” Mr. Williams says. What really matters, HSBC’s Fred Neumann says, is housing. Home sales picked up recently, and new construction, though not a sign of “soaring growth,” will at least keep the economy stable.

11:16 pm

Asian equity mets starting to rise. Shanghai now only -3.5% & Taiwan and Aus up 2-3% on day. First wave of bottom fishing coming through.

— Warren Hogan (@anz_warrenhogan) August 25, 2015

11:16 pm

The $A catching a bid helped by the Yuan not falling as much as some had feared this morning. Yen also coming back as risk appetite improves

— Warren Hogan (@anz_warrenhogan) August 25, 2015

11:15 pm

ASX VIX up 53% today, sitting at 53...highest since Dec 2013

— Chris Weston (@ChrisWeston_IG) August 25, 2015

11:14 pm | China Property Is a Rare Bright Spot | by Anjie Zheng

As global equities were roiled yesterday on renewed worries about China's economic slowdown, there was one bright spot: Chinese property sales. The market traditionally interprets a rally as bad for real estate sales, since investors use pocket money to buy stocks, and vice-versa when the market corrects, says Barclays analyst Alvin Wong. Property prices in 32 cities tracked by the bank rose 6.5% this week over last and sales of units rose by 38% this month from a year earlier.

11:04 pm | NZX-50 Outlook Gets Rosier | by Rebecca Howard

New Zealand's NZX-50 is turning around, now only off 0.1% compared with 2.5% earlier, while several other Asian markets are gaining. "It looks like the market has swung from fear to the idea that things are looking a bit cheap," says Hamilton Hindin Greene broker James Smalley. He says a lift in the Dow futures will also help sentiment.

10:59 pm

Good news: the buying in Asia has conviction. Turnover vs 30-day average: Hang Seng +158% ASX +128% Nikkei +150% #NotASleepyAugust

— Patrick McGee (@PatrickMcGee_) August 25, 2015

10:54 pm | At the Heart of the Global Rout: China's Economy, Not Its Stock Market | by Gregor Stuart Hunter

China’s stock market crash isn’t directly responsible for the recent plunge in global equities, but its flabby economy sure is. “Investors seemed to believe that the shellacking of oil and other materials’ prices as China’s equity bubble burst signaled that the problem of oversupply, excess capacity and producer-price deflation was worse than perceived,” writes Principal Global Investors’ chief global economist, Bob Baur, in a note. But a bigger problem is that China’s economy has driven global growth for decades, he says, and no alternative is emerging as it slows.

It doesn't appear China will resume that role, either--if the country holds to its goal of shifting toward growth driven by consumption rather than exports.

“Following through on those market-oriented reforms already on the agenda would help China’s gradual transition from an export-led industrial economy to one driven by household spending,” Mr. Baur adds. “That could also provide a stronger basis for its long-term growth as well as spark improvement around the world.”

10:54 pm | Goldman Sees Strong Support for Hong Kong-Listed Mainland Stocks | by Jacky Wong

Goldman Sachs sees "strong fundamental support" for Hong Kong-listed Chinese stocks. "China's macro issues are valid and well documented, but we think they are also discounted in China equities," it says. The bank says H-shares are trading at only 11% above historic lows during the global financial crisis seven years ago, in terms of price-to-book ratios. It sees robust support for MSCI China at 51 and HSCEI at 8,600, both around 10% lower than current levels.

10:51 pm

China shares paring back losses, benchmark Shanghai Composite now down 3pc after opening down 6.4pc pic.twitter.com/Q2761EmFkA

— Philip Wen (@PhilipWen11) August 25, 2015

10:47 pm | Some Emerging-Market Optimism | by Anjani Trivedi

So what’s the case for optimism in emerging markets? For one, foreign debt levels in Asian nations are much lower compared with the size of their economies than during the late 1990s Asian financial crisis. Although many currencies are plumbing levels last seen back then (think the Indonesian rupiah and Malaysian ringgit), their governments are in a better position to withstand tremors this time around. As currencies decline, foreign debt becomes more expensive for companies and governments to repay. Today, though, local-currency debt markets have become more important, reducing exposure to volatile forex markets. And countries have much larger foreign-exchange piles with which to defend their currencies than 20 years ago. According to Wells Fargo Securities, foreign reserves in Asia are about a quarter of gross domestic product, higher than just less than 10% before the Asian crisis. That’s not to say the region isn’t under pressure. A key ratio of Malaysia’s external vulnerability–foreign reserves to short-term external debt–has fallen from 3.7 times at the end of 2013 to 1.1 times as of Aug. 14. The ringgit on Monday fell to a fresh 17-year low, down nearly 22% for the year. Bank Negara Malaysia has spent $21.4 billion in a bid to stem the ringgit’s slide this year, drawing on its foreign reserves. Yields, which move inversely to prices, on 10-year Malaysian bonds have risen 0.32 percentage points since the beginning of this month to 4.398%. But it’s still a far cry from the Asian crisis, when Malaysia instituted capital controls.

10:40 pm | by Fiona Law

The offshore yuan is showing signs of stability, clawing back some dramatic losses from last night, as offshore investors appear to have regained some confidence following rebounds in regional stock markets. Unlike the yuan onshore, which is manipulated by the People’s Bank of China, the offshore yuan, or CNH, trades freely outside the country and mainly in Hong Kong, the biggest hub of offshore yuan trading.

The offshore yuan has been bruised since China’s surprise devaluation on Aug. 11 and was hard hit Monday when China stocks plunged 8.5%. It fell as much as 1.2% in London hours and hit 6.52 per dollar–the weakest level since the yuan devaluation.

Now, the offshore yuan is hovering at 6.47 per dollar as sentiment stabilizes in line with firmer stock markets (Hong Kong’s Hang Seng Index is up 2%). It comes as onshore sentiment is still relatively weak. The PBOC on Tuesday set the fixing at a weaker level–6.3987 a dollar vs 6.3862 Monday, reflecting the onshore yuan’s weaker close Monday. The onshore spot yuan stands at 6.4158 a dollar Tuesday, 0.2% off from Monday’s close, while the Shanghai Composite Index is down 4.2%.

10:38 pm

China's markets open down 6.4 percent. If this leads to another fall in NYSE I'm going all in. China's falls means nothing. It's a casino.

— Jorge Guajardo (@jorge_guajardo) August 25, 2015

10:26 pm | Yen and Euro Surge in Asia | by Ewen Chew

The yen rocketed to a seven-month high against the U.S. dollar, gaining 2.6% within seconds on Monday, while the euro also surged to a seven-month peak on fears of global deleveraging. The yen and euro have been used by investors as conduits for earning higher yields on emerging-market assets. But as global stocks tank on worries that China's equity bubble is deflating--and taking along with it other regional equity markets--high-risk trades are being unwound. The Swiss franc has also rallied sharply, gaining as much as 5.6% to the U.S. dollar over the past week, due to the same fears.

10:25 pm | by Anjani Trivedi

In the current global selloff, emerging markets are getting hit hardest. Global money managers pulled $26 billion out of emerging-market stocks and bonds between Jan. 1 and July 31, according to data from EPFR Global, a company that tracks fund flows around the world. The MSCI Emerging Markets currency index, a broad gauge of currencies of developing nations, is at its lowest level since June 2010, while the MSCI emerging markets equity index is down 15% this year, on track for its worst annual performance since 2011, in U.S. dollar terms. Many of these nations, from Brazil to Indonesia, rely on China’s demand for their commodity exports. “We need a sentiment change in China. This is not Fed driven,” said Edwin Gutierrez, head of emerging market sovereign debt at Aberdeen Asset Management in London, which has $483.3 billion under management. “All the [China] bears have clamped on the story and are running with it.”

10:23 pm

How quickly some things can change:

Today's big losers: havens. The yen: -1.4% euro -0.8% 10yr Treasury yield +4bps to 2.04%

— Patrick McGee (@PatrickMcGee_) August 25, 2015

10:09 pm

Our colleagues over at Barron's report that this morning's sharp fall in Shanghai "came despite – or because?" – of the Chinese central bank's $23 billion liquidity injection.

"On a net basis, we will see a net 30 billion yuan liquidity in the interbank market. There was a total of 120 billion yuan in repurchase agreements expiring today," reports Shuli Ren.

"This move could be seen as [the PBOC] being reluctant to engage in medium-term monetary easing policies such as reserve ratio or interest rate cuts."

10:02 pm

Over in Japan, the Nikkei Stock Average has just flipped into positive territory for the day.

10:00 pm | PBOC Injects $23 Billion Into Financial System | by Shen Hong

The People’s Bank of China just said it injected more than $23 billion into the financial system, via seven-day reverse repos.

9:54 pm

You heard it here first:

Everyone freaking out about the Chinese stock market right now should also note: Hang Seng Index up 1.6%, KOSPI rises 0.6%, TAIEX gains 1.3%

— Gregor Stuart Hunter (@gregorhunter) August 25, 2015

9:54 pm | UBS Says Don't Worry About Long Japan Slump | by Eleanor Warnock

There is no need to be "overly pessimistic" about Japan stocks in the long term due to strong corporate earnings, firm economic growth ahead and possible policy support from the government and the Bank of Japan if turmoil hurts the economy, UBS strategists say.

9:47 pm | by David Crawshaw

Wait, what's this then? Hong Kong's Hang Seng Index has reversed losses at the open and is now up 1.1% at 21488. Well...

9:44 pm | U.S. Dollar-Indonesian Rupiah Pair Inches Higher | by Ewen Chew

The U.S. dollar-Indonesian rupiah pair inched higher to mark a new 17-year peak of 14,070, surpassing Monday's 14,045 level. Year-to-date losses for the rupiah versus the U.S. dollar stand at 12%. Risk appetite is still tentatively negative after Wall Street's dramatic overnight plunge. But there is a glimmer of optimism that relief might soon come from China. Analysts widely expect an emergency loosening of monetary policy by the People's Bank of China to increase lending and shore up investor confidence. Additionally, traders are paring bets that the U.S. Federal Reserve will lift interest rates next month, depressing the U.S. dollar elsewhere in Asia, due to the potentially dire consequences it would have on already-battered stock markets. The pair is now at 14,070, compared with its Monday close of 14,045.

9:42 pm | by David Crawshaw

While we wait for what carnage might unfold in China’s markets today, here’s our own Gregor Hunter (@gregorhunter) on what’s driving the equities meltdown.

Video: @gregorhunter explains the fallout from China’s failure to stem a stock market rout: http://t.co/Rru1NnBmRn pic.twitter.com/CiG5vYAxT4

— WSJ China Real Time (@ChinaRealTime) August 25, 2015

9:40 pm | Yen Surge Deemed Irrational, but May Flag Changing Tide | by Hiroyuki Kachi

The U.S. dollar-Japanese yen pair’s tumble overnight to 116.15 can't be justified in terms of economic fundamentals, but the downside bias toward 116 may preview a change in trend, says Takuya Kanda, senior researcher at Gaitame.Com Research Institute. The rapid pace of the pair’s decline--now at 119.30--is tied to "dim uncertainties over [the] China economic slowdown." If the pair goes back to 120 again, yesterday's fall can be interpreted as "noise" and an excessive reaction to China concerns. On the flip side, however, if the pair falls again to 116, "we have no way but to become aware of a turnaround in trend."

9:30 pm

The Shanghai Composite Index opens down 6.4% at 3004.13.

9:25 pm | Contagion and Confusion in Asia's Currency Markets | by Vera Sprothen

Asian investors brace for another day of plummeting share prices in a triumph of fear over fundamentals, says Mardi Dungey, professor of economics and finance at the University of Tasmania. What really sparked the selloff, says Ms. Dungey, is a phenomenon called contagion--an overreaction by investors who are spooked that fundamental economic relationships responded differently to what they had expected. "The current currency uncertainty in Asia is a good case in point," says Ms. Dungey. "To date, there is no real evidence of the currency war that had been feared by some commentators. Instead, lowered expectations for future growth...have created falls in the value of other Asian currencies." Typically it takes investors a little while to sort out their reaction and recalibrate expectations after being rattled by contagion, says Ms. Dungey.

9:22 pm | by David Crawshaw

All eyes now await the China market open in 10 minutes, following Shanghai’s spectacular 8.5% dive Monday. Will Beijing or the central bank announce fresh liquidity for the banking system to reassure investors following the yuan’s devaluation? So far, Beijing’s moves have spooked rather than reassured markets.