The US stock market has rebounded slightly following an early trading plunge in the wake of a big drop in Chinese stocks. Minutes after the opening bell Monday, the major indices tumbled wildly, making Friday’s 530-point sell-off in the Dow look like a minor blip, but that’s what happens in stock market roller-coaster rides.
The Dow Jones Industrial Average opened down an incredible 1,015 points, or 6%, while the S&P 500 was down about 5% and the Nasdaq Composite Index – which represents tech stocks – opened down 8%.
The S&P (SPX) fell 20 points, or 1 percent, to 1,951.
China’s benchmark Shanghai Composite index is down more than 8 percent in Monday trading.
Global markets plummeted early Monday, as concerns about slowing growth in China continued to seep across exchanges.
Similar to the sell-off on Wall Street, however, European stocks also cut their losses with the Stoxx 50 index down 4.6 per cent at 2960 points in late afternoon trading in Europe.
Currencies and commodities are also falling sharply, because those markets rely heavily on strong demand from China. That correction was caused by a combination of factors, one being the U.S. government near breach of its debt ceiling and subsequent credit-rating downgrade from Standard & Poor’s, as well as fears about Greece’s financial condition.
US treasury securities surged as investors bought less risky assets.
The market’s last correction was in April 2011. That helped trim some of the market’s earlier losses.
That uncertainty about China’s economy has made its way into U.S. markets as well.
China’s stock market fell Monday by its biggest margin in eight years, defying Beijing’s multibillion-dollar intervention to stop a slide that has wiped out the gains of this year’s price boom.
The Shanghai index suffered its biggest percentage decline since February 2007, with many China-listed companies hitting their 10 percent downside limits.
Apple has depended on China for growth in recent years, so it made sense the shares would be hit by concerns that a weak economy there could result in fewer gadget sales.
The region has also been squeezed by a reversal of capital flows back toward the rich world, which has been accelerating as America’s Federal Reserve moves closer to interest rate increases.