So here's the deal -- the optimists were almost right!  (But of course "almost" doesn't buy the bacon.)  Today, after suffering yet another 8% loss on the Shanghai index, China announced their third round of central bank rate cuts and that triggered a rally 'round the world that shot the Dow back up past all of yesterday's huge losses.  In fact, by 2 p.m., all of Monday's losses had not only been recouped but the index was ahead over 200 points.  Then in the final hour, there was another rush to sell and the Dow again lost more than 400 points to close down 205, making it the seventh consecutive day of losses and sixth consecutive day of triple-digit losses.  Since the day really had nothing but good news, the late session sell off can only be attributed once again to panic.

Among the good news was the highest consumer confidence reading in seven months, single family home sales rebounding in July, and JP Morgan remaining optimistic about its year-end projections for the S&P, trimming their estimate only 100 points from 2,250 to 2,150.  But with the S&P today at 1,867 that's still quite a healthy growth projection for the next four months.  Volume once again was extremely heavy at 10.4 billion, though thankfully nothing like yesterday's 14 billion.  But even with Monday's trouncing, the S&P valuation has still only fallen to 15 times earnings vs 17, and at 15 it's still above the 14.7 10 year average.  As today's expert says - people are still nervous about what might happen [in China] tonight so nobody wants to just sit around.  Let's see if the bloodletting continues on the morrow.

Markets | Tue Aug 25, 2015 7:59pm EDT

Wall Street's rally goes up in smoke, indexes end lower

BY NOEL RANDEWICH

DJ:   15,666.44  -204.91        NAS:  4,506.49  -19.76        S&P:  1,867.61  -25.60

A strong rally on Wall Street evaporated on Tuesday and stocks ended with deep losses as concerns about China's economy outweighed lower valuations that some saw earlier as bargains.

In a dramatic trading session, major indices turned negative in the final minutes of trading after previously climbing almost 3 percent.

Investors cited more worries that a slowdown in China could hobble global growth, even after the country's central bank cut interest rates on Tuesday for the second time in two months. The move came after Chinese stocks slumped 8 percent on Tuesday, on top of an 8.5 percent drop on Monday.

"People are still nervous about overseas and what might happen tonight. Nobody wants to sit around and see what happens," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Tuesday's drop followed steeper losses on Monday, when the Dow Jones industrial average fell more than 1,000 points at its lows and the S&P 500 recorded its worst day since 2011.

In the past week, the S&P has lost 11 percent.

"Investors are still concerned about exogenous growth and shifting Fed policy, and both of those are still on the table," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

The Dow Jones industrial average fell 204.91 points, or 1.29 percent, to end at 15,666.44.  The S&P 500 lost 25.59 points, or 1.35 percent, to finish at 1,867.62 and the NasdaqComposite dropped 19.76 points, or 0.44 percent, to 4,506.49.  Earlier, the S&P rose as much 2.9 percent, the Dow as much as 2.8 percent and the Nasdaqas much as 3.6 percent.

JPMorgan cut its year-end target for the S&P 500 to 2,150 from 2,250.

All of the 10 major S&P sectors were lower, with the utilities index's 3.2-percent drop leading the decline.

Pepco Holdings Inc fell 16.47 percent after a District of Columbia regulator denied Exelon Corp's $6.8 billion bid for the power utility, possibly delivering a knockout blow to the deal.

Monday's pummeling pushed the S&P 500's valuation down to about 15 times expected earnings, compared to around 17 for much of 2015 and just above a 10-year average of 14.7, according to Thomson Reuters StarMine.

Data on Tuesday showed U.S. consumer confidence increased to a seven-month high in August. New U.S. single-family home sales rebounded in July, adding to evidence of underlying strength in the economy that could allow the Federal Reserve to raise interest rates this year.

Best Buy jumped 12.57 percent after the owner of the biggest U.S. electronics chain reported an unexpected increase in quarterly sales.

Decliners outnumbered rising stocks on the NYSE by 1,721 to 1,384. On the Nasdaq, 1,480 issues fell and 1,379 advanced.

The S&P 500 index showed just one new 52-week high and 47 new lows, while the Nasdaqrecorded seven new highs and 125 new lows.

Volume was heavy, with about 10.4 billion shares traded on U.S. exchanges, far above the 7.5 billion average this month, according to BATS Global Markets.