US stocks pare losses after 1000-point Dow plunge

Concerns about a China-led global economic slowdown and tumbling commodities prices had U.S. traders fearing the worst after a 5 percent decline in the both the S&P and Dow last Thursday and Friday.

That ugly trend continued Monday as the Dow fell more than 600 points by late afternoon, falling to 15,773, in what will likely be another day of sharply downward markets in the wake of Friday’s 530-point sell-off of the Dow.

The broad-based S&P 500 sank 62.61 (3.18 per cent) to 1,908.28, while the tech-rich Nasdaq Composite Index fell 180.66 (3.84 per cent) to 4,525.38.

The Shanghai Composite Index finished trading eight-and-a-half-percent lower, the largest one-day percentage fall in over eight years, and, but for the suspension of some major company stocks, it could have been worse.

Global investors are anxious about growth in the world’s second largest economy.

Compounding the real-time falls all index futures contracts slumped by their 10 per cent daily limit, pointing to more bad days ahead.

“They’re up for now, but futures can get swamped by what happens in Asia today”, Matthew Sherwood, head of investment strategy at Perpetual Ltd.in Sydney, which manages about $22 billion, said by phone.

China devalued their currency on August 11 and since that time more than trillion has been wiped from global stocks. The technical definition of a correction is a 10% drop from a recent peak. Many emerging market currencies – including Russia’s ruble – tumbled against the U.S. dollar.

Germany’s DAX 30 index also slipped by around 3%, dipping into bear market territory after losing 20% of its value since April. The Dow was down more than 1,000 points moments after the open before recovering somewhat.

As the global economy continues to react from events in China, markets dropped significantly around the world on Monday.

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.

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.

On currency markets, the pound was little changed against the US dollar and down slightly against the euro.