Overseas worries hamper US stock markets

Published on NewsOK Modified: January 27, 2014 at 3:25 pm •  Published: January 27, 2014

NEW YORK (AP) — U.S. investors are being hit with new worries from overseas just as the economy at home appears to be strengthening.

Investors are anxious about slower economic growth in China, the world's second-biggest economy, as well as the impact of political problems in countries like Argentina and Turkey. The Standard & Poor's 500 index fell moderately on Monday after a big drop last week caused by China and emerging-market concerns.

These worries are coming to the forefront at a time when the Federal Reserve is pulling back on its economic stimulus and amid signs that U.S. company earnings may be close to peaking. That is further exacerbating a sense among investors that an almost 30 percent gain for the S&P 500 index last year may have been too much, too soon.

Topping the list of investor worries are:

CHINESE GROWTH: A report last Thursday showed that Chinese manufacturing is set to contract in January for the first time in six months, adding to evidence of a slowdown in that nation's economy. China's growth, at 7.7 percent in the fourth quarter, is still far stronger than that of the United States or Europe, but it has slowed from the double-digit rates of the previous decade. As the Chinese economy has grown, so has its importance to the world. In 1990, China was the biggest export market for only two countries. By 2012 that number had swelled to 32, according to data collated by strategists at U.S. Trust.

TURKEY: The Turkish lira has fallen six percent this year and touched multiple record lows as investors worried that a corruption scandal might destabilize the government. Political stability has been key to the country's economic boom over the past decade. The lira fell to another record low against the dollar on Monday, and the slide only stopped when the nation's central bank said it would hold an emergency meeting this week.

"Turkey has a geopolitical role in bridging the east and the west," said Jorge Mariscal, chief investment officer for Emerging Markets at UBS Wealth Management. "So, you don't want instability added to region that is already fairly unstable."