Stocks slump the most in 3 months on new China worries

Ongoing concerns over China’s slowing economy and falling currency prompted the sell-off.

U.S. stocks fell sharply in early trade Thursday as a global selloff accelerated following another plunge in Chinese equities. Trading was automatically suspended as a result.

The latest plunge in Chinese stocks was set off by concern Beijing is allowing its yuan to weaken too fast against the dollar. The contract on Thursday dropped $2, or 5.6 percent, to settle at $33.97 a barrel. The Standard & Poor’s 500 index lost 21 points, or 1.1 percent, to 1,969. The Nasdaq fell 146 points, or 3 percent, to 4,689. The Dow has given up more than 900 points in just four days of trading in 2016. Hong Kong’s Hang Seng advanced 1.1 percent to 20,559.34 and Seoul’s Kospi was little changed at 1,903.14.

Financial and technology stocks also struggled.

Rossi said the lower yuan would “further deflate the demand for commodities and traded goods generally”, meaning “a further downside adjustment to potential world output is now unavoidable”.

Emerging market-exposed Aberdeen Asset Management dropped 8.9 percent, while the sell-off also hit Old Mutual, Mondi and Investec.

Banking shares also suffered, with Dow members JPMorgan Chase and Goldman Sachs losing 4.0 percent and 3.1 percent, respectively, and Citigroup and Morgan Stanley both shedding about 5.0 percent.

Government measures introduced a year ago to prop up share prices are being gradually withdrawn while investors are also unnerved by possible signs the country’s economy is in worse condition than thought.

Traders and economists fear the yuan’s depreciation may mean the world’s second-biggest economy is even weaker than had been expected and that it could trigger another wave of competitive devaluations around Asia and in other key economies.

The turmoil rocking global markets in the new year continued Thursday, after trading in China was halted following another huge stock plunge. Those halts, which were triggered twice this week, are increasingly seen as inadequate for preventing volatility. Still, oil prices are down about 70 percent since mid-2014. USA crude dipped 62 cents, or 1.8 percent, to $33.35 a barrel in NY. It has been trading at 11-year lows.

Spot gold rose more than 1% to $$1,89.30 an ounce. The Federal Reserve issues minutes from its December 15-16 meeting, where it raised interest rates for the first time in almost a decade.

Shares in Anglo American, Glencore, BHP Billiton, BP Group (BP.L) and Royal Dutch Shell fell between about 5 percent and 10 percent.

KB Home (KBH) reported earnings (http://www.marketwatch.com/story/kb-home-profit-and-revenue-lag-estimates-2016-01-07) early, posting fourth-quarter profit and revenue below the FactSet consensus estimates. Natural gas declined 5.6 cents, or 2.5 percent, to $2.267 per 1,000 cubic feet.

Some retail stocks performed well.

Macy’s jumped 3.6 percent as it unveiled $400 million in job cuts and store closures following a disappointing holiday shopping season.

The euro rose to $1.0870 from $1.0788. The dollar fell to 117.750 yen from 118.38 yen. That’s the worst four-day percentage loss to start a year on record, according to FactSet stats that go back to 1897.