US stocks sink on concerns over Chinese economy

NEW YORK (AFP) - US stocks on Monday ended the day decisively lower on concerns about the Chinese economy but rallied well above their intraday lows as US Treasury yields retreated.

The Dow Jones Industrial Average sank 139.84 (0.94 per cent) to 14,659.56.

The broad-based S&P 500 tumbled 19.34 (1.21 per cent) to 1,573.09, while the tech-rich Nasdaq Composite Index gave up 36.49 (1.09 per cent) at 3,320.76 Stocks opened firmly lower amid concerns about the Chinese economy. But the indices all came back from their intraday losses, with the Dow finishing more than 100 points above its low.

The yield on the 10-year US Treasury stood at 2.55 per cent late Monday afternoon after reaching as high as 2.66 per cent earlier.

Mr Peter Cardillo of Rockwell Global Capital also cited comments from some US Federal Reserve officials that emphasised the Fed would not scale back its accommodative policy immediately.

"We're probably getting to the end of this overreaction" to the Fed's comments last week, Mr Cardillo said.

Most of the companies in the Dow declined. The biggest drops were seen by industrials like Alcoa (down 2.4 per cent) and Boeing (down 2.1 per cent), while Bank of America shed 3.1 per cent and JPMorgan Chase lost 2.0 per cent.

Shares of Apple dived 2.7 per cent to US$402.34 after sinking below US$400 earlier in the session on concerns the company's products are losing appeal with consumers.

A research note from the brokerage firm Jefferies said Apple was likely to cut production plans for the iPhone to between 25 and 30 million in the third quarter, down from between 40 to 45 million.

Tenet Healthcare rose 4.5 per cent after announcing it would acquire Vanguard Health Systems for US$4.3 billion, including US$2.5 billion in Vanguard debt. Vanguard soared 67.3 per cent to US$20.70. The deal values Vanguard at US$21 per share.

Pharmaceutical company Allergan plummeted 11.6 per cent after Deutsche Bank slashed its rating on the company to "hold", citing guidance from the Food and Drug Administration that suggested the popular Restasis eye medication may soon face competition from generics.

Metals producer Freeport-McMoRan Copper & Gold fell 4.8 per cent after concerns about the slowing Chinese economy prompted a decline in prices of copper and other metals.

Bond prices were mixed. The yield on the 10-year US Treasury rose to 2.55 per cent from 2.51 per cent on Friday, while the 30-year slipped to 3.56 per cent from 3.57 per cent. Bond prices move inversely to yields.