Wall Street pares losses after dropping more than 1,000 points
Print Edition
US stock markets sank in morning trading yesterday in a wave of fear that circled the globe after a historic plunge in Chinese stocks.
The Dow Jones industrial average fell more than 1,000 points in early trading and the Standard & Poor’s 500 index slid into correction territory — Wall Street jargon for a drop of 10 percent or more from a recent peak.
The Dow has never lost more than 800 points in a day.
The major stock indexes pared some of the losses that dented investment accounts by midmorning.
Treasuries surged as investors bought less risky assets.
The Dow was down 378 points, or 2.3 percent, to 16,081 points as of 10:59am Eastern time.
The S&P 500 dropped 49 points, or 2.5 percent, to 1,921. The Nasdaq composite fell 111 points, or 2.4 percent, to 4,594 points. The three indexes are down for the year.
Heightened concern about a slowdown in China had already shaken world markets on Friday, driving the US stock market sharply lower. A big sell-off in Chinese stocks yesterday caused the rout to continue. That left investors unsure of how to gauge which companies might be a good bet to weather a slowdown in China.
“What’s a company that’s doing business with China actually worth right now? When you’re not sure, you tend to sell,” said JJ Kinahan, TD Ameritrade’s chief strategist.
China’s main index sank 8.5 percent amid fears over the health of the world’s second-largest economy.
Oil prices, commodities and the currencies of many developing countries also tumbled on concerns that a sharp slowdown in China might hurt economic growth around the globe.
The market slide was broad. All the sectors in the S&P 500 headed lower, with energy stocks notching the biggest decline, 3.4 percent. Cabot Oil & Gas fell the most among stocks in the index, sliding US$1.50, or 6.1 percent, to US$22.90.
In Europe, Germany’s DAX was down 3.8 percent, while the CAC-40 in France slid 4.6 percent. The FTSE 100 index of leading British shares dropped 3.9 percent.
The Shanghai index suffered its biggest percentage decline since February 2007, with many China-listed companies hitting their 10 percent downside limits. The benchmark has lost all of its gains for 2015, though it is still more than 40 percent above its level a year ago.
“There is a lot of fear in the markets,” said Bernard Aw, market strategist at IG.
The bloodletting spread across Asia earlier, where Japan’s Nikkei fell 4.6 percent, its worst one-day drop since in over two and a half years. Hong Kong’s Hang Seng index fell 5.2 percent, Australia’s S&P ASX/200 slid 4.1 percent and South Korea’s Kospi lost 2.5 percent.
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