Stocks Falter Overnight as Chinese Equity Markets Plunge

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U.S. Stock markets backed off from Tuesday’s strong closes overnight as China took moves to limit lending in an attempt to slow down the economy. The news sent shockwaves through global equity markets as the Shanghai index dropped 3%. Traders are concerned that less spending from China will derail the global economic recovery.

Last night IBM reported strong earnings but this news couldn’t carry the market. Investors may have been standing aside while awaiting the special election results from Massachusetts. The news that Republican Brown defeated the Democratic machine could pressure healthcare stocks, but insurance stocks may benefit if the current healthcare plan gets defeated.

Today could be a volatile day. The stronger Dollar indicates that investors are looking for lower yields and safety. This could weigh on higher yielding, higher risk assets like equities.

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