Wall Street fell more than 1% in early trading on Tuesday due to a fall in oil and copper prices on concerns about the outlook for the Chinese economy.
Copper prices hit two-week lows, while oil was down about 2%. The Chinese government’s efforts to stimulate growth by easing fiscal and monetary policy have failed to calm nerves, Reuters reported.
U.S. stocks ended higher on Monday, rebounding from losses late last week with help from Apple and financial shares, but a drop in biotech shares limited the advance.
However, trading remains volatile as investors try to gauge when the Federal Reserve will raise interest rates.
The CBOE Volatility index, known as the “fear gauge”, jumped 12 percent to 22.52, above its long-term average of 20.
“It was an extraordinarily quiet night of news and that is making the (European and U.S.) weakness even more frustrating (the selloff is very inexplicable),” J.P. Morgan said in a note issued before the start of trading.
The Fed last week kept rates at near-zero levels, citing the turbulence in a tightly linked global economy, including slowing growth in China.
Atlanta Fed President Dennis Lockhart said on Monday a rate hike later this year was still possible.
“The market is fragile as it is,” said Art Hogan, chief market strategist at Wunderlich Securities in New York. “The volatility will continue until we get some clarity from the Fed and China.”
