US stocks pare losses after 1,000-point Dow plunge

People watch trading boards at a private stock market gallery in Kuala Lumpur, Malaysia on Monday. Stocks tumbled across Asia on Monday as investors shaken by the sell-off last week on Wall Street unloaded shares in practically every sector, Kuala Lumpur, Malaysia, Aug. 24, 2015 | AP Photo by Joshua Paul, St. George News

U.S. investors got a serious jolt Monday when the Dow Jones industrial average tumbled 1,000 points minutes after the market opened in a wave of selling that circled the globe after a historic plunge in Chinese stocks.

Though the declines eased significantly as the morning went on, it sent a shiver of fear through Americans with retirement accounts or saving to buy a home that the bull market is over.

A worker of Tokyo Stock Exchange monitors stock prices on an electric screen during a trading session in Tokyo, Monday. Stocks tumbled across Asia on Monday as investors shaken by the sell-off last week on Wall Street unloaded shares in practically every sector, Tokyo, Japan, Aug. 24, 2015 | AP Photo by Koji Sasahara, St. George News
A worker of Tokyo Stock Exchange monitors stock prices on an electric screen during a trading session in Tokyo, Monday. Stocks tumbled across Asia on Monday as investors shaken by the sell-off last week on Wall Street unloaded shares in practically every sector, Tokyo, Japan, Aug. 24, 2015 | AP Photo by Koji Sasahara, St. George News

The Dow was down 199 points, or 1.2 percent, to 16,259 points as of 12:51 p.m. Eastern time. The S&P 500 dropped 27 points, or 1.4 percent, to 1,943. The Nasdaq composite fell 43 points, or 0.9 percent, to 4,662 points. The three indexes are down for the year.

The Standard & Poor’s 500 index briefly slid into correction territory after the opening — Wall Street jargon for a drop of 10 percent or more from a recent peak. The last market correction was four years ago. Treasurys surged as investors bought less risky assets.

The Dow fell 1,089 points within the first four minutes of trading as traders dumped shares. But the fire sale was short-lived. A wave buying cut the Dow’s losses by half just five minutes later.

Heightened concern about a slowdown in China had already shaken markets around the world on Friday, driving the U.S. stock market sharply lower. A big sell-off in Chinese stocks on Monday caused the rout to continue.

That’s 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.

A man looks at an electronic stock board of a securities firm in Tokyo, Monday. Stocks fell in early trading Monday in Asia as investors shaken by the sell-off last week on Wall Street unloaded shares in many sectors, Tokyo, Japan, Aug. 24, 2015 | AP Photo by Koji Sasahara, St. George News
A man looks at an electronic stock board of a securities firm in Tokyo, Monday. Stocks fell in early trading Monday in Asia as investors shaken by the sell-off last week on Wall Street unloaded shares in many sectors, Tokyo, Japan, Aug. 24, 2015 | AP Photo by Koji Sasahara, St. George News

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 consumer staples notching the biggest decline, 1.7 percent.

Citrix Systems was down the most among stocks in the S&P 500, shedding $4.62, or 6.2 percent, to $69.36. AGL Resources led among the gainers, rising $14.11, or 29.5 percent, to $62.

In Europe, Germany’s DAX fell 4.7 percent, while the CAC-40 in France slid 5.4 percent. The FTSE 100 index of leading British shares dropped 4.7 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.

Underlying the gloom in China is the growing conviction that policymakers and regulators may lack the means to stem the losses in that nation. The country is facing a slowdown in economic growth, the banking system is short of cash and investors are pulling money out of the country, experts note.

There is a lot of fear in the markets,” said Bernard Aw, market strategist at IG.

China’s dimming outlook is drawing calls for more economic stimulus from Beijing, though earlier government efforts to stop the sell-off in stocks appear to have done little to stabilize markets.

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.

Those declines followed tumbles over the weekend in emerging markets such as Egypt, Dubai and Saudi Arabia.

The panic has underscored the scale of the challenge for Chinese leaders in seeking to curb excess investment and guide the economy toward a more sustainable pace of growth.

“My biggest concern is that global growth momentum is very fragile. The most important step is to see China take further action to try to bring their economy to a 7 percent growth path,” said Rajiv Biswas, Asia-Pacific chief economist for IHS.

In currency trading, the dollar was at 119.25 yen on Monday, down from 122.05 yen on Friday. The euro rose to $1.1532 from $1.1138. Currencies fell hard in developing economies — particularly those that rely heavily on the export of commodities and oil, both of which China is a big consumer.

In commodity markets, benchmark U.S. crude dropped $1.48, or 3.7 percent, to $38.97 a barrel in New York. It fell 87 cents a barrel on Friday. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $2.50 to $42.96 a barrel.

U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.03 percent.

Story by AP business writers ALEX VEIGA and STEVE ROTHWELL

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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6 Comments

  • Brian August 24, 2015 at 3:58 pm

    This was just a warm-up for the real fireworks in mid-September.

    • native born new mexican August 24, 2015 at 4:40 pm

      You have that right Brian. Facts and figures don’t lie. I saw a cartoon of a great big wave headed towards the beach. The beach was full of people playing and sun bathing and paying no attention to the wave. It is fun right up until it isn’t. OH WELL Too bad for lots of people sunning themselves on the beach. What wave? I don’t see a wave!

  • ladybugavenger August 24, 2015 at 4:25 pm

    What’s happening in September? Dang, looks like I should have sold my stock last month or something good going to happen in September and I will sell sell sell

    • Brian August 24, 2015 at 5:22 pm

      There is a mid-September 7 year “cycle” that has played out for centuries (many years to-the-day, such as 1987, 2001, and 2008, though the market is closed on that day this year). It’s tied to the Jewish Shemitah (the 29th day of Elul). Believe it or don’t, whatever floats your boat. There is plenty online about it, but you can start here: https://www.youtube.com/watch?v=rkELgi6EkNo (non-religious, but the presentation is a bit over-the-top) or https://www.youtube.com/watch?v=YiMiTQ66848 (how it’s a message from God to repent as a nation), or just Google it. I’ll get hammered for posting this, but we can come back in a month and re-read the comments and see which way it went.

      • ladybugavenger August 24, 2015 at 5:47 pm

        I hope you don’t get any backlash Brian, 🙂 I actually did Google it after I posted the question…..we will see what happens in September, but what I see is this world is going to hell in a hand basket….repent!

      • ladybugavenger August 24, 2015 at 6:23 pm

        I’m not sure about the September thing cuz every September something happens in my life…..one world order is coming, when? No one knows but its happening slowly, chips in credit cards, new $100 bills that look like foreign currency, America keeps going further in debt,…it happens slow so people get use to the change, before you know it people will need a mark on their right hand or forehead to buy food….repent! Don’t take the mark!

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