Stocks remained under pressure but somewhat recovered from steeper losses in afternoon trading on Tuesday after a warning about US bank health and surprisingly weak Chinese trade data sent shivers through markets.
The Dow Jones Industrial Average (^DJI) dropped about 1%, or 360 points. Meanwhile, the S&P 500 (^GSPC) was down almost 1.1%, and the tech-heavy Nasdaq Composite (^IXIC) sank around 1.5%.
Worries about US banks were revived after Moody’s downgraded 10 small and midsize institutions, which came with a warning it could lower credit ratings for some of the nation’s biggest lenders. It flagged risks in their commercial real estate portfolios, a reminder that stresses in the sector persist after the banking crisis earlier this year.
In Europe, bank stocks tumbled after the Italian government said it will put a 40% windfall tax on lenders’ profits, raising fears that other countries could do the same.
Optimism about stocks also took a hit Tuesday when data showed a slump in Chinese imports and exports in July that was far worse than expected. Demand is weak, dimming the prospects for a rebound in the world’s second-biggest economy.
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