Stocks and oil prices plunged again Thursday on spreading fears that China’s economy, a major engine of global growth, is sputtering.
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Stocks were hit hard Thursday following China’s largest downward adjustment to the yuan since August.
China, meanwhile, will suspend its new stock market circuit-breaker mechanism – created to stop free-falling prices – from Friday, the Shanghai and Shenzhen stock exchanges have said.
The Dow Jones industrial average was down 167.65 points, or 1.02 percent, to 16,346.45, the S&P 500 lost 21.06 points, or 1.08 percent, to 1,922.03 and the Nasdaq Composite dropped 45.80 points, or 0.98 percent, to 4,643.63.
Traders kept a close eye on the key December employment data due out Friday, the first jobs report since the U.S. Federal Reserve’s mid-December decision to raise its interest rates.
For the second time in four days, trading in China was halted early by circuit breakers after a seven percent stocks plunge. WTI CLc1 fell 1 percent to $32.95 a barrel after gaining more than 3 percent earlier.
Banking shares also suffered, with Dow members JPMorgan Chase and Goldman Sachs losing 4.0% and 3.1%, respectively, and Citigroup and Morgan Stanley both shedding about 5.0%. The S&P 500 is down 4.9 percent since December 31, its worst four-day opening in its history, according to S&P Dow Jones Indices, while the Nasdaq is down 6.4 percent.
The market had opened higher after data showing US nonfarm payrolls surged in December and the unemployment rate held steady. US crude picked up 22 cents to $33.49 a barrel in NY and Brent crude, a benchmark for worldwide oils, lost 22 cents to $33.53 a barrel in London.
Economic reports caused investors to worry about China’s manufacturing and service industries. That made this the worst week since September 2011, when the market was roiled by the fight over the US debt ceiling and Standard & Poor’s move to cut the credit rating of the USA government.
Most of the blame goes to China, which is believed to be the biggest threat to USA stocks this year.
In other Asian markets, Tokyo’s Nikkei 225 rose 0.4 percent to 17,848.10 while Sydney’s S&P/ASX 200 was off 0.7 percent at 4,973.20. The NYSE Arca Gold Bugs Index has fallen by 2.7%, pulling back off yesterday’s two-month closing high. In 2009, it lost 8 per cent through the first five days.
Macy’s, which lost half its value since July, rose $1.18, or 3.3 percent, to $37.33 after the company said it will close 40 stores and eliminate more jobs.
The pan-European FTSEurofirst 300 index ended down 1.5 percent, leaving it with a loss of around 7 percent over the course of the week.
Container Store slumped 42.5 percent to $4.13, a day after storage products retailer’s fourth-quarter profit forecast missed estimates.
The euro rose to $1.0927 from $1.0788.
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Treasury prices rose in a global flight to safety, although the gain for the benchmark 10-year note was slim, with the ticking down 2 bps to 2.15%. The dollar fell to 117.750 yen from 118.38 yen.
