Dow Jones off to worst new year start ever

The Dow fell more than 300 points shortly after trading began Thursday, following a sharp selloff in China’s stock market. If the Dow dips below 16,516, it’ll be in correction for the first time since last summer.

The S&P 500 lost 1.2 percent to 1,991.94 at 2:05 p.m.in NY, on track for its lowest level since October 6. Apache Corp. and Murphy Oil Corp. tumbled more than 10 percent, on their way to the steepest losses in at least a year.

The S&P 500 made its worst start to a year since 2001, down 48.49 points, or 2.37 per cent, at 1,995.45, at 12:07 pm.

“A wild, but ultimately (and artificially) positive, post-circuit breaker suspension day of trading for the Chinese markets, fuelled by a classic “national team” intervention, has led to a tentatively optimistic start to the day for the majority of the European indices”, said Connor Campbell, financial analyst at Spreadex.

Technology stocks were also hit. The tech-heavy Nasdaq composite has plunged 8 percent since December 29. CNBC calls the start to the year the worst start EVER.

The latest scare came on Thursday as China’s stock market crashed 7% overnight, losses so severe that trading had to be halted for the day after the first half hour. The move appeared to be an acknowledgement that the newly rolled out system was exacerbating panic selling.

Ongoing concerns over China’s slowing economy and falling currency are behind the wild market gyrations.

The World Bank also cut its global economic growth forecast for 2016, saying the weak performance of major emerging market economies will tamp activity overall, as will anemic showings from developed countries such as the United States.

The Dow, S&P 500 and Nasdaq are about 6% below their all-time highs.

Adding to the gloom, oil prices fell to near 12-year lows and copper prices touched their lowest since 2009, weighing on energy and material shares.

“What you’re seeing here is this selling tsunami to sort of price in everything that’s been going on in China and the Middle East over the last couple of days”, Phil Orlando, portfolio manager at Federated Investors, told TheStreet.

New reports released this week reinforce concerns that China’s economy is slowing down more than investors realized.

China’s central bank set the yuan’s reference rate at an unexpectedly weak level, adding to anxiety about an economic slowdown that has dominated markets this week. Brent crude, a benchmark for global oils, lost 11 cents, or 0.3 percent, to $34.14 a barrel in London.

About 8.2 billion shares changed hands on USA exchanges, above the 7.1 billion daily average for the past 20 trading days, according to Thomson Reuters data. Shares of Freeport McMoran dropped 9.1 per cent to US$5.61 (RM24.52).