While you were sleeping: Wall Street slides

Wall Street dropped, along with equities in Europe, amid concern about China's slowing economic growth and its impact on the worldwide economy.

In late trading in New York, the Dow Jones Industrial Average shed 1.65%, the Standard & Poor's 500 Index retreated 1.72%, while the Nasdaq Composite Index sank 2.4%.

Declines in shares of Walt Disney and those of Merck, down 5.7% and 4.4% respectively, led the Dow lower.

Shares of Walt Disney suffered after Sanford C Bernstein analyst Todd Juenger downgraded his rating on the stock to "market perform," from "outperform." Juenger did the same for Time Warner shares, which last traded 4.7% lower.

The "Fab Five" – Netflix, Facebook, Apple, Google and amazon.com – were lower on the day.

A key question for Wall Street remains the timing of a US Federal Reserve interest rate increase. Most investors and analysts interpreted minutes from the July Federal Open Market Committee meeting, released on Wednesday, as indicating US policy makers might not raise interest rates next month.

Citi analysts begged to differ, predicting the Fed will raise rates at its September 16-17 meeting.

"The increased prominence of financial stability considerations in the FOMC discussion is a hawkish signal that markets apparently ignored with the release of the July minutes," according to the team at Citi, led by William Lee, Bloomberg reported.

US crude oil is trading near a 6-1/2 year low of $US40.21 a barrel. Economist Gary Shilling says he is sticking with his forecast the price will drop to between $US10 and $US20 a barrel.

"Right now there are so many more concerns than hopes," Boston-based Cabrera Capital Markets international trading director Larry Peruzzi told Bloomberg. "There are global growth concerns, Fed minutes created some uncertainty about rates, and also playing a part is oil poised to dip below $US40 a barrel."

In terms of US economic data, the Conference Board's index of leading economic indicators fell 0.2% in July.

Separately, the National Association of Realtors say existing home sales rose 2% to an annual rate of 5.59 million dwellings last month, the highest since February 2007, and the Labor Department says jobless claims rose 4000 to a seasonally adjusted 277,000 for the week ended August 15.

Finally, the Philadelphia Fed's business activity index climbed to 8.3 in August, up from 5.7 in July.

"We continue to expect both economic growth and labour market activity to continue shifting higher, providing the justification for the Fed to begin the normalisation in monetary policy in September," New York-based TD Securities deputy chief economist Millan Mulraine told Reuters.

In Europe, the Stoxx 600 Index ended the session with a 2.1% drop from the previous close. The UK's FTSE 100 Index fell 0.6%, France's CAC 40 Index declined 2.1%, while Germany's DAX Index shed 2.3%.

Greek Prime Minister Alexis Tsipras resigned yesterday, setting the stage for snap elections on the international bailout that his government negotiated to keep the nation from defaulting and exiting the euro currency zone.

(BusinessDesk)