The Latest Update:
The Dow fell 588.47 points, or 3.6 percent, to 15,871.28. The index dropped more than 1,000 points in the opening minutes of trading.
The Standard & Poor’s 500 index slid 77.68 points, or 3.9 percent, to 1,893.21.
The Nasdaq composite shed 179.79 points, or 3.8 percent, to 4,526.25 points.
Treasury notes rose. The yield on the benchmark 10-year note fell to 2.01 percent from 2.04 percent on Friday.
Stocks tanked at Monday’s start, with the Dow plunging more than 1,000 points, following the lead set by overseas markets as an intensifying rout persisted in all but assets viewed as safe havens.
“This all starts is with the stock bubble in China, and when you have a stock market that is up 160 percent in two years, from June 2013 to June 2015, which is a 60 percent annual rate of growth, that’s a bubble,” Hugh Johnson, chairman of Hugh Johnson Advisors, told CBS MoneyWatch. “When you unwind a bubble, it doesn’t stop at 30 percent, or even 35 percent, especially those investors are highly leveraged — these are Chinese investors, 90 million of them — that is precisely what is going on, and it doesn’t stop at 35 percent.”
In less than 40 minutes, the Dow had recouped half of its initial losses. As of 10:39 a.m. ET, the Dow (DJI) was down 417 points, or 2.5 percent, to 16,043. The S&P (SPX) fell 47 points, or 2.5 percent, to 1,924. And the Nasdaq dropped 108 points, or 2.3 percent, to 4,599 points.
n Friday, the Dow declined into correction mode as investors voiced worries that the U.S. economy is not strong enough to block events overseas, with China’s slowdown of particular concern.
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 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 staunch 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.
There’s also uncertainty over whether the Federal Reserve would hike interest rates in September for the first time since 2006.