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US Stocks Tumble as China's Yuan Falls Dramatically in Value

Strategic Insights

— 2 min read

US stocks suffered a sharp decline on Tuesday following a significant drop in China's currency, the yuan. The Dow Jones Industrial Average dropped 212.33 points, or 1.21 percent, to 17,402.84, while the S&P 500 declined 20.11 points, or 0.96 percent, to 2,084.07. The Nasdaq Composite Index shed 65.01 points, or 1.27 percent, to 5,036.79. The People's Bank of China (PBOC) announced a policy change to improve the yuan's central parity system, citing a strong US dollar and sharp appreciation in the RMB real effective exchange rate as key considerations.

The central parity rate of the RMB weakened sharply by 1,136 basis points to 6.2298 against the US dollar on Tuesday. US analysts said the PBOC's decision would add further momentum to the strong dollar, posing a challenge to US multinationals. Meanwhile, US labor productivity rebounded slightly in the second quarter of this year, increasing at a 1.3 percent annual rate during April-June.

Key Takeaways:

  • The Dow Jones Industrial Average dropped 212.33 points, or 1.21 percent, to 17,402.84 on Tuesday.
  • The S&P 500 declined 20.11 points, or 0.96 percent, to 2,084.07, while the Nasdaq Composite Index shed 65.01 points, or 1.27 percent, to 5,036.79.
  • The People's Bank of China (PBOC) announced a policy change to improve the yuan's central parity system, citing a strong US dollar and sharp appreciation in the RMB real effective exchange rate as key considerations.
  • The central parity rate of the RMB weakened sharply by 1,136 basis points to 6.2298 against the US dollar on Tuesday.
  • US analysts said the PBOC's decision would add further momentum to the strong dollar, posing a challenge to US multinationals.
  • US labor productivity rebounded slightly in the second quarter of this year, increasing at a 1.3 percent annual rate during April-June.
  • Google Inc. announced that Alphabet Inc. would replace Google Inc. as the publicly-traded entity, with all shares of Google converting automatically into the same number of shares of Alphabet.

Statistics:

  • 212.33: The number of points dropped by the Dow Jones Industrial Average on Tuesday.
  • 1.21: The percentage decline of the Dow Jones Industrial Average on Tuesday.
  • 20.11: The number of points declined by the S&P 500 on Tuesday.
  • 0.96: The percentage decline of the S&P 500 on Tuesday.
  • 65.01: The number of points shed by the Nasdaq Composite Index on Tuesday.
  • 1.27: The percentage decline of the Nasdaq Composite Index on Tuesday.
  • 1,136: The number of basis points by which the central parity rate of the RMB weakened against the US dollar on Tuesday.
  • 6.2298: The new central parity rate of the RMB against the US dollar on Tuesday.
  • 1.3: The percentage increase in US labor productivity during April-June.
  • 690.30: The price of Google shares on Tuesday after the announcement of the Alphabet Inc. conversion.
  • 13.71: The value of the CBOE Volatility Index on Tuesday.
  • 43.08: The price of West Texas Intermediate crude oil on the New York Mercantile Exchange on Tuesday.
  • 49.18: The price of Brent crude oil on the London ICE Future Exchange on Tuesday.
  • 1.1035: The price of the euro against the US dollar in late New York trading on Tuesday.
  • 125.15: The value of the Japanese yen against the US dollar in late New York trading on Tuesday.
  • 1,107.70: The price of gold futures on the COMEX division of the New York Mercantile Exchange on Tuesday.

Sources:

  • XINHUA NEWS AGENCY, "U.S. stocks tumble as China's yuan falls drastically in value following central bank decision to improve the yuan's central parity system", August 11, 2015.

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