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US stocks plummet on second China devaluation

Published: 10:52 12 Aug 2015 EDT

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The global sell-off in equities continued Wednesday and US shares started decidedly lower, as traders took flight after China's second currency devaluation in two days.

The People’s Bank of China let the yuan drop again overnight, fixing the currency 1.6% below Tuesday’s close, following the 1.9% devaluation a day ago.

In corporate news stateside, the big stories were that e-commerce giant Alibaba, which listed in New York to much fanfare last year, and retail giant Macy's - both had earnings reports out.

At the time of writing, the benchmark Dow Jones was down 205 points at 17,199, the Nasdaq was down 62 to 4,973 and the broader based S&P500 lost 21 to 2,063.

All three lost over 1%. Meanwhile, in London, stocks were also taking a hit, with the FTSE100 losing 97 points, or 1.45%.

Some experts reckon the latest Chinese situation could trigger the worst global sell-off since the meltdown of 2008.

Chris Beauchamp, analyst at London spreadbetters IG, said: "China appears to have discovered a love for active FX intervention.

"Once is an experiment, but twice makes it a trend. The spectre of currency wars was worrying enough yesterday, but today it looks real enough to touch."

In company news, e-commerce giant Alibaba (NYSE:BABA) slipped almost 6% to US$72.71, as revenue growth in its latest quarter missed analysts' numbers.

For the three months to end June, revenues at the group rose 28% year-on-year to US$3.26billion (bn), but analysts had estimated a figure of US$3.39bn.

It also unveiled a deal, which will allow Chinese online shoppers to buy Macy's (NYSE:M) merchandise.

Speaking of the famous retail store, its shares plunged almost 4% as the largest U.S. department-store chain, reported fiscal second-quarter revenue and profit that trailed market expectations and it lowered its full-year sales outlook.

Adjusted earnings were $0.64 per share in the 13 weeks ended August 1, the Cincinnati, Ohio-based company said in a statement today. That result missed the $0.76 average estimate of 20 analysts polled by Capital IQ.

Overall, net income fell to $217 million, or $0.64 per diluted share, in the quarter, from $292 million, or $0.80 per diluted share, a year earlier.

Kirkland Lake Gold (TSE:KGI) added 5.36% to US$5.50 in Toronto trading after announcing it produced 41,482 ounces of gold for the three months ending July 31, the first quarter of its stub year 2015 (May 1 to December 31, 2015).

Fossil Group (NASDAQ:FOSL) fell earlier but added 1.25% despite it posting downbeat second-quarter revenue and cut its outlook for the year, weighed by currency headwinds.

In smaller caps, Eleven Biotherapeutics (NASDAQ: EBIO) raced up 229% to US$7.70 after it told investors the first patients had been dosed with EBI-005 in Phase 3 Study in Patients with moderate to severe allergic conjunctivitis.

On the losing front, cloud computer and storage firm Netlist (NASDAQ:NLST) sank over 16% to US$0.42 as it posted second quarter results, which appeared to disappoint.

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