New York – On Tuesday stocks tumbled down on Wall Street following European markets decrease as the Volkswagen (XETRA: VOW3) emissions scandal has hit shares everywhere.
The economy keeps suffering as investors continue to analize the risks associated with slowing world growth and uncertainty related to the Federal Reserve’s rate hike plans. The Dow Jones fell 218.55 points hitting 16.291,64 while the S&P 500 and NASDAQ are set to begin the session 28 and 75 point lower respectively.
Fed’s cited concerns about global growth and financial tumult for holding off on rate hikes appear to have created additional uncertainty for investors. Since the Fed’s announcement on Thursday, a handful of Fed officials have said the no-hike decision was a “close call” and that a rate hike is still a good possibility later this year.
“Does the cloud the Fed created over the market stay?” reportedly asked Patrick Adams, a money manager at Choice Investment Management, adding that he expects “a wild market ride for the short-term” and says it “makes sense to be defensive” given the market’s current troubles.
The Dow Jones was also affected by the news released about one of its most important players, Goldman Sachs, which revealed that its CEO, Lloyd Blankfein, has a “highly curable” form of lymphoma. Goldman Sachs shares were down 2.6%, to $178.59.
Additionally, ahead of Wednesday’s weekly crude inventory update, crude oil has taken a turn for the worse amid global economic uncertainty since a barrel of U.S. produced crude was 2.8% lower at $45.67.
Stocks also took a big hit in Europe adding to Wall Street’s angst. Shares of Gemany’s DAX plunged 3.7%, the CAC 40 in Paris was off 3.6% and the FTSE 100 in London was down 2.6%.
“While last week’s Fed decision continues to weigh on sentiment, it seems traders today are spooked by a steep selloff in European markets,” Karee Venema, an analyst at Schaeffer’s Investment Research, said in a note to IFA Magazine.
European markets are also being hurt by the widening scandal at German automaker Volkswagen (VW), which is in crisis mode after admitting it used software to cheat on emissions tests.
“The company was dishonest and we totally screwed up” the company’s CEO has said in a press release. But the fallout continues for a second day. VW shares are down close to 20% again Tuesday, after a similar-sized rout Monday.
Source: USA Today