China Slump Sparks Large Wall Street Sell-Off

This is a special group. Report from ABC news. Hello everyone I'm Tanya Rivero in New York with an ABC news live digital special report we are closely watching the volatile stock market today Wall... See More

This is a special group. Report from ABC news. Hello everyone I'm Tanya Rivero in New York with an ABC news live digital special report we are closely watching the volatile stock market today Wall Street is getting hammered the Dow now down more than 200 points. Well now just about a 192 -- let's go right to Yahoo! -- -- Lauren Lister for more on what is moving Wall Street right now Laurie -- -- and short. Absolutely said -- after last week's stocks became very volatile after the -- unseat. Policy decision and Ben Bernanke coming out saying hey here is a road -- for winding down Q -- which you -- the market have become so addicted to. After that we saw suddenly a liquidity crunch in China and then what happened over the weekend is that the Central Bank -- mountains said. -- enough liquidity in the system. We're not and it -- -- guns blazing and do something expects this so what you see is that Chinese stock market selling off state closed. Down five point 3% in the case -- that Shanghai composite that was. Their biggest one day drop and closed at four years and then you just -- cascading effect. In the US as stocks have continued to tablet to the extent which used at which brings -- -- right now which could be in part because of fundamental reasons stemming from China and -- -- and also to just I mean and kind of more technical things like -- calls going on. Right so mainly -- the -- slide is what -- Wall Street on this Monday morning slide cracked. That I'm hearing China and -- that these indeed -- the two big things day ever I am talking to as it is insane to me is behind it no reason why -- why China is so important why Wall Street is so worried about it. OK so on kind of a more technical basis that what traders are telling me is that this could be about margin calls. So stay here really invested in China and you borrowed shares to invest in China. And now let's send their market is tanking well guess what your brokers are calling you and saying hey -- make it a margin call. They're saying you need to put up more cash that means you may have to sell things in order to come up with that cash. Things like US stocks that are very liquid so that could be one of the reasons why we're seeing some of this selloff in US stocks and then from a broader more fundamental reason. China is part of the jet the big. Global gross story it's been real driver and so concerns about China concerns about any kind of a hard landing which some -- forecasting for a long time. Any of this from from a bigger picture basis would have investors. Jittery more fundamentally we did you -- Goldman Sachs come out and cut. China's economic forecast so -- indications -- It is -- Eileen to growth a slowdown in credit growth which -- immediacy that People's Bank of China appears to be allowing. And -- as a concern over -- report coming up tomorrow. We'll -- this -- home -- so it will be interesting to watch because. With what we've seen recently in with regards to add to that -- announcements we've seen a rise in ten year treasury rates this impacts mortgage rates. The people -- will be looking to that home -- reports first signs are any indication that they gave anything that. They executives on that call might say it would indicate any kind of trouble that rising mortgage rates is having on their business because back in more broadly be an indication. What impact rising mortgage rates is having on the housing market I would also mention. It with the volatility that has come from the feds. Decision people will be looking. For indications. The economic fundamentals. Being good enough to justify these gains -- the market has seen if the Fed does start to drive down. Any kind of -- -- even if they have a plan to jot -- support which is something that -- -- coliseum on an LA area and it's been talking about so keep your eye on economic reports and tomorrow we get an amber Bentley a couple of housing reports -- to be important watch and we also get consumer confidence and also a durable goods orders have people that -- have their eyes. On a -- economic news. All very important reports -- as want to point out that the looking at the -- but does that again down over 200 points down 207 points right now. Continue to slide you think you're gonna see it hovering around this point all that -- -- think we could be in for a real bloodbath. Well this isn't that part of the interviewer I get out my crystal ball time I got a -- it -- -- yeah. I don't have that unfortunately it will look like I let it will have to watch this play out I'm not. Confident enough and my act. -- days. You know sued saying excited to get your proper response here but certainly this is. Big it's notable and other thing to watch is that ten year treasury yield has -- His shot at. Two point 6% high -- above that even highest in two years. This is a sign and it perceived lack of confidence in the control -- central banks to keep those rates low at least that's according to traders I'm talking to so that's certainly a big big thing to watch picture of also they will. All be watching -- -- from Yahoo! finance thank you so much. Thank you I'm Tanya Rivero in new York and this -- been an ABC news digital special report. To report from the.