Why the China Crash Doesn’t Matter To the S&P 500

Why the China Crash Doesn’t Matter To the S&P 500
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Why the China Crash Doesn’t Matter To the S&P 500

As China’s Shanghai Exchange continues to plummet, further highlighted by yesterday’s (7/27/2015) 8.48% one-day decline, the question at hand is how will this impact U.S. equities? Ryan Detrick, the author of the linked article, examined how the S&P 500 has historically acted over the past 20 years on days when the Shanghai Exchange fell more than 8%. Interestingly, on those prior eight occasions, the S&P 500 has only averaged a 0.32% one-day decline. Detrick believes that Chinese equities could fall an additional 20%, however he feels that U.S. equities would not be significantly negatively impacted and could actually see a positive reaction from investors seeking stability.

 

 

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