Stocks also plunged Monday on signs of weakness in China’s manufacturing sector, with the Shanghai Composite skidding nearly 7 percent.
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Trading in Chinese stocks was suspended on Thursday after a key index plunged 7%.
Shares on the New York Stock Exchange took another tremendous beating on Wall Street Thursday – its third in the last four days of trading – as the Dow tumbled almost 400 points as economic volatility continues in China.
China’s main stock index plunged again Thursday as its currency weakened, triggering the second automatic halt in trading this week.
Stocks with large exposure to the world’s second-largest economy such as miners and energy companies fell sharply, hitting their lowest level since 2009, while vehicle makers were also firmly on the back foot and fell to a three-month low. The steep drops in USA indexes continued what has been a dismal start to 2016 for global markets.
The pattern suggests that a retest of the August-September lows in China are likely, something that at the time pulled US markets down in concert with tumbling Chinese equities.
Thursday’s drop pushed the tech-heavy Nasdaq composite index into what market watchers call a “correction”, or a drop of 10 per cent from a recent peak.
On Thursday, Chinese authorities lowered the yuan currency’s central rate against the United States dollar by 0.51 percent to 6.5646, the lowest since March 2011, spurring worries of deeper cuts ahead.
The Dow Jones industrial average sank 195 points, or 1.2 percent, to 16,710 as of 11:45 a.m. Eastern time.
The Dow is now down 5.2 percent since the start of the year, while the Standard & Poor’s 500 index is off 4.9 percent – both the worst four-day openings in history.
The benchmark Shanghai Composite Index rose 2 percent to 3,186.41 after swinging between gains and losses. Brent crude, a benchmark for global oils, lost 32 cents to $33.917 a barrel in London.
But plummeting oil prices-crude oil has slumped more than 40% since last May, to just $36 a barrel-have as much to do with a supply glut as they do with weakening demand for energy.
The mechanism, which was implemented at the beginning of the year, has been triggered twice this week.
In a sign of the concern among investors, gold jumped another 1.5% to $1,108 an ounce.
The health of China’s economy has big implications for countries all around the world even though the US economy is doing fairly well and Europe’s economy looks healthier.
Angus Nicholson, market analyst at IG in Melbourne, Australia said the sell-off this week only underlines that the Chinese government’s intervention a year ago to support the market had delayed the inevitable slump.
Aerospace giant Boeing fell $5.82, or 4.2 percent, to $133.01, and freight railroad Union Pacific felt $1.75, or 2.3 percent, to $73.08. The stock declined $1.09, or 9.2 percent, to $10.70. Bonds prices fell. The yield on 10-year Treasury bond edged up to 2.19 percent from 2.17 percent.
Heating oil sank 4.5 cents, or 4 percent, to $1.081 a gallon.
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In other Asian markets, Tokyo’s Nikkei 225 rose 0.1 percent to 17,790.56 while Sydney’s S&P/ASX 200 was off 0.4 percent at 4,990.80. The dollar fell to 118.38 yen from 118.97 yen late Tuesday.
