US Stocks Remain in Red After Chinese Market Slump

New York (July 27)  Stocks pared lows though remained in the red on Monday morning in response to a massive, inexplicable selloff in Chinese equities.

Benchmark indexes suffered their fifth day of losses, their longest losing streak in six months. The Dow Jones Industrial Average was down 0.57%, moving off its lowest point since Feb. 3. The S&P 500 fell 0.39% and the Nasdaq tumbled 0.57%.

"A meltdown in Chinese equities has injected additional uncertainty into an already busy week for global markets. With investors cautiously awaiting Wednesday's FOMC decision, plenty of key U.S. data on the docket, and equity earnings shifting up a gear, the plunge in Chinese equities early in the week is adding to a cautious tone," said Gennadiy Goldberg, U.S. strategist at TD Securities.

China's Shanghai Composite tumbled 8.5% on Monday, its largest single-day drop since June 2007, in response to fears a government rescue plan was petering out. Stocks were lower after fresh data showed industrial profits in China down 0.3% in June after two months of gains. However, selling tripled in volume later in the session, long after data was digested.

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"Sentiment is still quite negative and there are concerns about what the policymakers will do next," Medha Samant, investment director of Asia equities at Fidelity Worldwide Investment, told CNBC. "We don't think the stock market rout is over yet."

Durable goods orders in the U.S. rose 3.4% in June, driven by strong bookings with passenger airlines. Business investment remained weak with orders for core capital goods gaining 0.9% in June. Economists expected the headline number to increase 2.6%.

Teva Pharmaceuticals (TEVA - Get Report) jumped more than 9% after agreeing to buy Allergan's (AGN - Get Report) generic drug company for $40.5 billion. The deal marks the latest in a surge of mergers and acquisitions in the health care industry. Deals in the sector this year have already reached $180 billion.

UBS (UBS) was slightly lower after reporting better-than-expected earnings in its most recent quarter. The Swiss bank earned 1.21 billion Swiss francs ($1.26 billion), up 53% from a year earlier and far higher than 878 million francs expected. Results were listed earlier after a Swiss newspaper published false numbers.

Apple's (AAPL - Get Report) Apple Watch will be available at Best Buy (BBY) stores beginning Aug. 7. Apple has teamed up with the largest U.S. consumer electronics chain amid reports sales of the Apple Watch have trailed off. No official sales numbers have been released.

Fiat Chrysler Automobiles (FCAU) is facing a record fine of $105 million for failing to commit to 23 recalls, totalling 11 million vehicles. The fine includes a $70 million cash fine, $15 million if more violations are found, and $20 million based on fixing current issues, according to The New York Times.

McGraw Hill Financial (MHFI) shares were on watch after it reached a deal to buy SNL Financial for $2 billion.

Qualcomm (QCOM - Get Report) was slightly higher after Morgan Stanley upgraded shares to "overweight" from "equal weight" with a $75 price target. The firm said the upgrade was due to continued market leadership, more positive chip industry conditions, and an attractive valuation.

Source: TheStreet