ABC News Digital Special Report Closing Bell

Breaking down the volatile market and what it means for investors.
3:00 | 06/24/13

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Transcript for ABC News Digital Special Report Closing Bell
This is a special report from ABC news. Hello everyone in the navy he. -- so special report on. -- live coverage. And bell ringing -- -- this afternoon the flow from health policy airline companies feel well when. And -- -- the closing -- for this Monday June 24 stocks tumbled today pushed down by new concerns over China's economy then made a rebound. This comes after last week's painful sell -- over concerns the Fed might stop its bond buying plan later this year. The NASDAQ and the S&P 500 are down the -- -- the -- down about a 139 point. Joining us now with more on what's making Wall Street so volatile as Monday ABC news chief business and economics reporter Rebecca Jarvis high -- -- thanks for joining us I have baby here. So -- -- what's going on in China Shanghai stocks plunged more than 5%. Yes what's going on in China. -- is that the Chinese newspapers which are controlled by the government have -- reports recently that suggests that. Banks in China are going to be lending as readily to. Individuals to companies in China in fact they are saying that there will be what's known as tighter monetary policy going forward. Meaning it'll be more difficult to get alone and more expensive to get a loan. That lending has lent itself to growth in China and now the -- -- If the lending isn't there the growth won't be very keep in mind -- the fastest growing or one of the fastest growing economies in the world the second largest economy in the world. And we are -- global economy -- in days so people in the United States are paying attention to that. As well as -- fed chair Ben Bernanke which is what caused a lot of the volatility last week as well -- is so how I was going on tied directly for fluffy down like we -- daily he set a connected. As a global economy but it is is it even more than that. Well it it's significant because it traders are now trading the global economy so what happens. In Shanghai what happens to the Nikkei in Japan we tend to see that fast forward and push through to -- -- -- of the European markets which is why. This morning. Stocks were at their worst levels of the session in fact it could about a lot worse today even though the Dow ended down. It was down over 200 points in the mid point of the -- and the midpoint of today's trading session. So -- it is a global economy traders are thinking about this globally and it's a very interconnected system. China owns much of the United States and -- our debt we he happened to be big consumers of Chinese products. And -- a lot of their products are in the imports. That we take and so it's it's important to consider. All of the world economies and especially the big ones in China as the -- test. Absolutely is that stocks tumbled right out of the gate this morning. And were able to race most of those lots as we have a little time lapse here about the importance -- -- today. Wow what a -- -- last so did recover a little bit in the holiday. No one can ever say it beyond a reasonable doubt exactly why something happens in the stock market I mean you can look at the market and there are always clues as to what the big things the big issues are. The big issues are China the big issues are the Federal Reserve. Why did stocks climbed back well I'm not gonna -- -- gas or say specifically what one person said because one person's thesis statement. Is more than likely different from and others but ultimately here what we're seeing is volatility because of the uncertainty of course China is a big question. But what the Fed does next you mentioned in the introduction they've been pumping 85 billion dollars into the markets every single month -- month after month for years now. And all of a sudden last week when fed chair Bernanke said we might be pulling back in dialing back on that that's when the market really had the big dramatic response. And what we're seeing is the follow through that the question is. Can we go forward as an economy without that stimulus when the training wheels come off to use a bike analogy when those training wheels come off can we -- on our -- is this one going to get wobbly that's how strong well our legs the -- attack upon our question. Earning season is upon them by some reports it doesn't look like the reports are going to help things what are you hearing. I'm hearing from many companies that are on the more negative side preannouncement. You get these whisper numbers beforehand and you -- you get a sense from Wall Street what companies might be reporting and whether or not they're going to be what's known is meeting expectations when a company meets or beats expectations that's usually a good thing well. A lot of companies in fact seven to one are coming out more negative than they are positive on what we're gonna hear from them in their third quarter announcement so. It could be more volatility coming out of company's corporate America in this earnings season. And I would also point out though that -- summer tends to be a volatile time for stocks the last two Summers. Have been particularly volatile and one of the reasons is that where we're really watching every bit of news and information trying to get a sense for what comes next but another reason is that. The volume the amount of trading that's taking place on Wall Street during the summer months is always -- So a big trade can move things dramatically in either direction. And and that really lends itself to the volatility and we have this overhang of uncertainty. That just. And creates even more so other people love that answer it's -- a best case freer. For your retirement savings in your stomach and just sounds like we all need to be ready for what could possibly be much more rubble -- ride out right Rebecca Jarvis thank you so much faith and you can we judge -- about that Rebecca Jarvis on Twitter. I'm Tanya Rivero a new York -- this has been an ABC news digital special report. This has been a special report from me.

This transcript has been automatically generated and may not be 100% accurate.

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