Stocks Pull Back Amid NYSE Halt, China Jitters

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Stocks traded solidly lower on Wednesday after a “technical issue” brought trading to a halt on the New York Stock Exchange for more than three hours.

The Dow Jones Industrial Average tumbled 261 points, or 1.47% to 17515. The S&P 500 lost 34 points, or 1.66% to 2046, while the Nasdaq Composite fell 87 points, or 1.75% to 4909.

All ten S&P 500 sectors were in negative territory, with energy and materials leading the way lower.

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Trading on the NYSE was stopped around 11:30 a.m. ET and remained in a holding pattern until 3:10 p.m. ET. All open orders at the time were cancelled.

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Despite the NYSE halt, action on Wall Street continued. The exchange said its all-electronic ARCA and options markets remained open. The Nasdaq declared self-help against the NYSE and rerouted trades to other exchanges. In the last 30 minutes before the closing bell, NYSE composite volume was sitting 8% above its one-month average.

Shares of Intercontinental Exchange (ICE), the NYSE’s parent company, fell 2.4%.

“Under any circumstances where there is an unexpected trading halt, much less NYSE floor wide, investors and the broader market landscape are given an unexpected variable to price. That is rarely a positive and tends to undermine confidence,” Peter Kenny, chief market strategist at Clearpool Group said. “Liquidity has enormous value to investors. Trading halts deny investor access to that liquidity.”

The broader market was down in negative territory from the start of the session, with jitters over China and Greece persisting. The VIX index, a reflection of market anxiety, jumped 22% to post its highest close since January.

Traders in the U.S. turned their focus to China where the Shanghai Composite closed 6% lower after an 8.2% plunge at the open. The move comes as the nation’s stock market dives deeper into bear market territory, which it entered last week after sinking more than 30% in the last month.

Over the weekend, the Chinese government attempted to prop up the market with a range of measures, and so far trading in more than 40% of the market there has been suspended.  On Wednesday, China’s government said it plans to spend $40.3 billion in the weakest areas of the nation’s economy, and work to speed up large public service projects like road construction. Further, regulators said they would ease rules for insurers to buy up blue chips, while state-owned companies should wait to sell any holdings in public companies.

But the support hasn’t seemed to do much to encourage investors.

A spokesperson for the China Securities Regulatory Commission in a statement Wednesday, called the selloffs in the market “irrational,” and described the market mood as “panic sentiment.” According to media reports, China’s securities regulators enacted a ban on major shareholders, corporate executive and directors to prevent them from selling their stakes in public companies for six months.

“So far, the Chinese policymakers’ actions have been ineffective and a bit puzzling,” Michael Block, chief strategist at Rhino Trading Partners wrote in a note. “I see all of these stocks halted and am shaking my head, thinking that this will solve nothing.”

He noted the actions are similar to those taken in the U.S. back in 2008.

“U.S. regulators banned short selling in financial stocks…only to see all of those stocks collapse and make new lows in February to March 2009. The rest was history, but those months were scary times,” he said.  

Elsewhere in Asia, Hong Kong’s Hang Seng dropped 5.84% to 23517, while Japan’s Nikkei fell 3.14% to 19737.

Meanwhile, Greece was given a final ultimatum: Bring a viable proposal for debt relief to the table, or face an exit from the eurozone, and on Wednesday, Greek Prime Minister Alexis Tsipras sent a letter to European leaders requesting an additional three-year emergency loan. In exchange, Tsipras promised to enact tax and pension reform.

In a statement, Tsipras said the proposal is “socially just” and should be a workable agreement for both Greece and its other eurozone members.

“This framework includes credible reforms that respect social justice. It also includes a commitment to sufficiently cover the financial needs of the country in the medium-term, a strong investment package to address the major problems – mainly unemployment – as well as the commencement of a real discussion on the necessary debt restructuring,” the statement said.

Amid the ongoing drama overseas, European markets traded in positive territory. The Euro Stoxx 50, which tracks large-cap companies in the eurozone, rose 1.01% to 3327. Meanwhile, the German Dax climbed 0.66% to 10747, the French CAC 40 rose 0.75% to 4639, while the UK’s FTSE 100 traded up 0.91% to 6490.

In currencies, the euro rose 0.51% against the U.S. dollar. The yield on the benchmark 10-year U.S. Treasury note fell close to 0.03 of a percentage point to 2.21%. Bond yields move in the opposite direction of prices.

Meanwhile, after a nasty plunge in the prior session, commodities looked to take a pause. U.S. crude oil continued trading to the downside, sliding 1.3% to $51.65 a barrel. Brent crude fell 0.60% to $57.03 a barrel.

Gold also drifted higher, rising 0.8% to $1,162 a troy ounce. Copper, which is largely seen as an economic barometer due to its broad industrial uses, touched its lowest level in six years Tuesday, turned around on Wednesday, rising 1.9%.

In the U.S., the Federal Reserve released the minutes from its latest policy meeting. Most members of the Federal Open Markets Committee are awaiting more proof that American’s economic recovery will continue before raising interest rates.

Traders have kept a close eye on the FOMC minutes to gauge what members are thinking as far as the timing and trajectory of interest rate hikes. Currently, rates remain at historic lows. Many on Wall Street expect September to bring the first rate hike, while some see a second hike as early as December.

On the corporate news front, Alcoa (AA) rose 0.7% in after-hours trading. The aluminum maker kicked off earnings season with a second-quarter adjusted profit of 19 cents a share, below the consensus estimate of 23 cents. Revenue was $5.9 billion, beating calls for $5.8 billion.

Microsoft (MSFT) was down 0.1% after Redmond announced layoffs in positions related to its phone business. The company said it would eliminated 7,800 jobs, and record a $7.6 billion impairment charge related to assets from its Nokia Devices and Services acquisition, as well as a restructuring charge between $750 million and $850 million.

Barclays (BCS) said on Wednesday its CEO Antony Jenkins will depart the firm after three years at the helm. The British bank said the move comes amid a strategic change at the company where it looks to boost shareholder returns. Shares slipped 1.2%.