“This all starts 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. Treasurys surged as investors sought the relative safety of government bonds, while the U.S. dollar weakened and oil prices continued to drop.
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More: Here’s why stocks are tumbling.
At the close, the Dow’s loss was pared to 588.47 points at 15,871.28.
The Dow fell 1,089 points within the first four minutes of trading as traders dumped shares. The drops were so harsh that regulators halted all trading in S&P 500 index futures and Dow Jones futures, pulling the so-called “circuit breaker”, so that they would not fall further.
The Nasdaq Composite dropped 179.79 points, or 3.82 percent, to 4,526.25, also in correction.
Chinese stocks plunged more than 8 percent on Monday in panic selling, with flagship indexes smashing key support levels and posting their biggest one-day percentage losses since the height of the global financial crisis in 2007.
It’s no secret that China is the primary source of most of the global market fears this week.
“What’s a company that’s doing business with China actually worth right now?”
Oil is a lifeline of economic growth for many developing countries, which are also seeing their currencies lose value because of their economic exposure to China.
On commodity markets, the benchmark oil price dipped below US$39 a barrel.
World markets dropped in response amid fears over the health of China’s economy.
The Stoxx Europe 600 closed 5.3% lower, the biggest one-day decline since December 2008.
Those declines followed tumbles over the weekend in emerging markets such as Egypt, Dubai and Saudi Arabia.
The worries have seen the FTSE 100 officially enter “correction” territory more than 10% down from its all-time high of 7104 in April.
“My biggest concern is that global growth momentum is very fragile”.
Concerns about a slowdown in the world’s second-largest economy have fueled the slump in Chinese stocks.
The euro briefly shot to as high as $1.17.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 5,1 percent to a three-year low.
Commodity prices fell, with Brent crude petroleum falling past $45 a barrel.
The MSCI all world stock index was off 3.8 percent at the end of the U.S. session.
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Another sign of fear: The 10-year Treasury yield slid below 2% on Monday.
