China's stock market is getting pummeled and history shows that is bad news for US markets
When China's stock market falls sharply, there's a good chance U.S. stocks — and some big blue chip names like Goldman Sachs and Caterpillar — go down with it.
The Shanghai Composite Index plunged 2.9 percent Tuesday, sending negative ripples through world markets. China stocks are now down 12 percent in October and 26 percent over the last 12 months.
But U.S. investors feel insulated from China's losses. Why wouldn't they, with the S&P up 4.5 percent this year while Shanghai is down 25 percent?
But a study by CNBC using analytics tool Kensho found that U.S. stocks are more often weaker when the declines in Chinese stocks are large. Over the past 10 years, when Shanghai stocks fell 10 percent or more in a 30-day period, the U.S. stock market was up only about 30 percent of the time, and the U.S. indexes all averaged significant declines.