Investors also pushed down the price of oil and metals in preparation of further drops in Chinese stocks on Friday. When trading resumed 15 minutes later, stocks plunged further, falling more than the 7 percent limit that triggers a daylong trading freeze.
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The Dow Jones Industrial Average plunged 392.41 points on Thursday, the third day of triple-digit losses this week, as concerns about the Chinese economy continued to rattle the markets. Investors are also concerned that the government is letting the yuan get weaker because that may be a bad sign for the health of China’s economy, the second-largest in the world.
China’s benchmark Shanghai Composite Index plunged more than 7% overnight – triggering the second so-called circuit breaker move to halt trading this week.
The tension spread across continents, sending indexes sharply lower in the US and Europe.
The downturn in the United States has been concentrated in technology stocks, which could suffer if demand weakens for iPhones and other electronics. The Nasdaq has fallen six days straight. The Nasdaq composite gave up 55.67 points, or 1.1 percent, to 4,835.76.
US and European companies have rushed to sell cars and a multitude of other products to China’s fast-growing middle class. And the country’s huge manufacturing sector is a major buyer of machinery and basic materials such as copper and oil, often from countries such as Brazil and Russian Federation.
While the two ETFs each slumped more than 6 percent in NY, the declines were less than the 7 percent drop in the CSI 300 Index that shut down mainland markets after less than 30 minutes of trading.
USA crude plunged to its lowest level since February 2004. Brent crude, a benchmark for global oils, lost 32 cents to $33.917 a barrel in London.
Investors also should look beyond what is less than one week of trading for the year.
Teen retailer Zumiez raised its forecast for the fiscal fourth quarter, and its stock jumped $2.57, or 17.1 percent, to $17.65.
The price of gold added $15.90, or 1.5 percent, to $1,107.80 an ounce.
2016 has started with a series of warning signs about China’s economy.
PAYROLLS LOOM: How U.S. stock actually open could hinge on December jobs data.
A slowdown in China is seen as a threat by many investors because the country has been the main engine of global economic growth for years, particularly during the depths of the Great Recession. A monthly survey of China’s service industries slipped to a 17-month low. Silver rose 36.8 cents, or 2.6 percent, to $14.344 an ounce. If the Dow dips below 16,516, it’ll be in correction for the first time since last summer. Natural gas declined 5.6 cents, or 2.5 per cent, to $2.267 per 1,000 cubic feet. In Japan, the Nikkei finished 2.33 percent lower, CNBC reported.
The euro rose to $1.0849 from $1.0788.
In currency markets, the dollar fell to 117.95 yen from 118.67 yen in the previous day’s trading as investors bought the yen as a safe haven.
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“The poor start to the year clearly warns that global growth concerns remain, that commodity prices are still under downwards pressure and that volatility in investment markets will likely remain high”, said strategist Shane Oliver of AMP Capital in a report.
