Wall Street falls on global slowdown concern; Disney is collapsing

By Rodrigo Campos

(Reuters) – The S&P 500 fell to a more than six-month low on Thursday, closing in negative territory for the year, on worries that a slowdown in the Chinese economy will translate into slower global growth.

Consumer stocks led the decline on Wall Street, with Disney falling 6 percent after a brokerage downgrade, while Apple fell 2 percent after a report that overall smartphone sales in China fell in the second quarter.

Concern about the Chinese economy was underscored by a nearly 8 percent drop in the Shanghai stock index ( .SSEC ) so far this week and after the Commerce Ministry said on Wednesday that exports could continue to fall in the coming months.

“The biggest problem is certainly that we don’t know how much the Chinese economy is slowing down,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“That shows up in the oil price going down,” he said, pointing to the correlation between stocks and crude oil futures.

US crude ( CLc1 ) edged higher after earlier hitting its lowest level since March 2009, while Brent ( LCOc1 ) fell 2.3% to its lowest level since January.

The 14-day correlation between S&P 500 and Brent prices is at a five-month high.

The Dow Jones industrial average (.DJI) fell 358.04 points, or 2.06 percent, to 16,990.69, the S&P 500 (.SPX) lost 43.88 points, or 2.11 percent, to 2,035 .73 and the Nasdaq Composite (.IXIC) declined 6 points or .IXIC. 2.82 percent to 4,877.49.

The S&P 500 and Dow’s declines were their biggest daily percentage declines since February 3, 2014, while the Nasdaq fell the most since April 10, 2014.

The S&P 500 is now down 1.1% year to date. It also traded below its 200-day moving average for the entire session for the first time since last October.

At Thursday’s session low, the S&P 500 was down 4.6% from its intraday high set in late May.

“We had a lot of things go wrong today, both fundamentally and technically. Essentially, there is continued concern about slowing global growth and weakening oil prices. The market was not able to maintain the 200-day moving average from a technical point of view. ,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama

“For tomorrow, ideally, we could see some stabilization and a move back to the 200-day moving average. The risk is that if there’s something that investors don’t like, it’s going to be very easy to sell over the weekend.”

The CBOE Volatility Index (.VIX) rose 25.5% to close at 19.14, its highest in six weeks, as traders paid more for protection against another S&P 500 decline.

Disney ( DIS.N ) fell 6 percent to $100.02 and Time Warner ( TWX.N ) fell 5 percent to $73.90, leading media stocks lower after a downgrade of Bernstein, who cited massive structural change in the industry.

“The model didn’t change overnight, but it was called upon by Disney for the first time for their earnings,” Hogan said.

Disney shares have fallen 17.8% since the company reported earnings earlier this month.

Apple ( AAPL.O ) fell 2.1 percent to $112.65 after a Gartner report said smartphone sales in China fell in the second quarter for the first time quarterly. Apple sees China as a key growth market.

A bright spot in tech stocks was NetApp ( NTAP.O ), up 3.4 percent to $30.78 after the data storage equipment maker beat expectations.

NYSE decliners outnumbered advancers by 2,612 to 457, a ratio of 5.72 to 1; on the Nasdaq, 2,396 issues declined and 437 advanced, for a ratio of 5.48 to 1 favoring the decliners.

The S&P 500 had four new 52-week highs and 40 new lows; The Nasdaq Composite had 16 new highs and 208 new lows.

About 8 billion shares changed hands on U.S. exchanges, above the daily average of 6.7 billion so far this month, according to BATS Global Markets data.

(Reporting by Rodrigo Campos, additional reporting by Caroline Valetkevitch; Editing by Nick Zieminski and Steve Orlofsky)