Stocks Tank as QE Nears End, Major Fund Winds Down, and Ebola Fears
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Stocks sold-off dramatically Wednesday on Ebola fears, global economic weakness, a major investment fund liquidation and growing worries about the end of QE this month.
With less than an hour to go before the market close, the Dow was down 252 points, the Nasdaq down 79 and the S&P 500 down 28.
In Europe, manufacturing PMI for the euro area in September was revised down to 50.3 from the flash reading of 50.5. Franceās PMI remained unchanged at 48.8 while Germany's was revised down to 49.9 from the flash estimate of 50.3. Also, in the U.K. manufacturing PMI in September was below market expectations of 52.7 at 51.6, down from the August reading of 52.2 (revised down from 52.5).
In China, manufacturing PMI remained flat at 51.1.
In the U.S., ISM Manufacturing was reported at 56.6 versus the 58.5 expected by economists. Also, Markit manufacturing came in at PMI 57.5 versus the 57.9 expected. On a positive note, the ADP private sector job report showed gains of 213,000 versus 205,000 expected.
Yesterday afternoon the CDC confirmed the first Ebola case diagnosed in the U.S. A man tested positive for Ebola after traveling to the U.S. from Liberia to visit family. He was admitted to the hospital on September 28th and was placed in isolation. The CDC says this is the first case of Ebola diagnosed in the U.S. ever and first of this stain diagnosed outside of Africa. Overall, the CDC said while Ebola is scary, the U.S. can effectively contain the spread of the disease. A number of Ebola-related stocks are sharply higher, including: Tekmira Pharmaceuticals (NASDAQ: TKMR) (+26%), Lakeland Industries Inc. (NASDAQ: LAKE) (+28%) and Alpha Pro Tech Ltd. (NYSE: APT) (+9%).
On the Fed, the bond buying program is set at $15 billion for the month of October. Given the Fed has been tapering $10 billion per month, the Fed is expected to move to end of QE at the October 29th FOMC Meeting.
Lastly, mid-day it was reported that Relational Investors is winding down and dissolving its massive $6.6 billion investment fund. The news follows an announcement last month that its co-founder Ralph V. Whitworth was taking a leave of absence from the firm because of his health. The fund is known for taking large, concentrated equity bets.
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