(NEW YORK) — Wall Street may be in for a wild ride Thursday after a sharp retreat for stocks in Japan. U.S. stock futures dropped after the Nikkei index in Tokyo plunged 7.3 percent overnight, its worst one-day loss in more than two years.
Global stock markets are in retreat, hammered by a one-two punch.
The first blow was struck when U.S. markets turned from gains to losses after the release of minutes from the Federal Reserve. The minutes showed that a number of officials were ready to taper off the aggressive policy of quantitative easing, with the monthly purchase of $85 billion in government bonds. The Fed’s recent moves had helped push up stock prices.
The second shoe to drop came from China. The HSBC Purchasing Managers Index fell this month, adding to signs of a fragile economic recovery for the world’s second-largest economy is losing steam.
HSBC economist Hongbin Qu in a statement said, “The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds.”
China’s economic growth slowed unexpectedly in the first quarter and forecasters have cut their growth outlook for the year.
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