Wall Street opens in red, Dow Jones falls 1000 points

Shares in banks and asset managers also fell, and the Euro STOXX Volatility Index rose to its highest since late 2011 – more evidence of investor unease.

Fears about the health of China’s economy have ratcheted up to the point that the S&P 500, made up the largest U.S. companies, is now sitting in “correction” territory – a 10% decline from a recent peak. The Dow recovered some of that lost ground but still finished down 588 points or 3.6 percent for the day at 15,871.

The closing price for the Dow also signaled its first official correction since 2011.

Art Hogan, the chief market strategist at Wunderlich Securities in Boston, spoke to WBZ NewsRadio 1030’s Deb Lawler Monday as the Dow Jones Industrial Average dropped more than 1,000 points at one point.

Christinia Negron used to have a 401(k) until she took all her money out of the market a year ago. The Nasdaq composite fell 211 points, or 4.4 percent, to 4,496 points.

“We’re coming off an extremely placid period in markets”, said Bill McNabb, chief executive officer and chairman of the Vanguard Group, a mutual fund giant with a large regional office in Scottsdale. “Investors shouldn’t let that send them into a panic”, he says. It has its normal ups and downs that are part of the process. A lot of people forgot what nasty days feel like.

Dividend-paying stocks are another good bet, he said.

“Even if [their funds] are allocated fairly aggressively, they realize this is a short-term correction they are going through”, he said. That’s the longest losing streak for oil since 1986, a time when OPEC drove the price down as low as $10 a barrel. U.S. oil and gas stocks have already lost about $310 billion of market value this year. The rout continued Monday as China’s main stock index sank 8.5%. Investors need to prepare for rocky times ahead, including more uncertainty about China’s economy and uneasy feelings about when the Federal Reserve will move to raise interest rates.

“European markets have not re-rated to anything like the same extent and remain attractively valued in our view – though they too may sag a bit further”, he said.

Stocks have kept climbing even as corporate earnings growth has slowed. Know how much of your portfolio is invested in stocks vs. bonds. That was the highest level in at least a decade, according to data from FactSet.

It was the second straight trading day in which the Dow has fallen 500 points or more. The wave of selling knocked the S&P 500 into correction mode for the first time since 2011 and the Dow to its lowest close in a year and a half. The central bank may try to estimate the impact of a falling stock market on the wealth and spending habits of U.S. households. The sector is down nearly 25 percent this year.

The turmoil there was sparked by growing concerns about a slowdown in the economy, so it might not be a great time to be upping your exposure to emerging market stocks, which are heavily influenced by what happens in China, Mussio says. Gold and silver also fell.

Oil majors Exxon and Chevron fell about 4 percent in premarket trading.

The S&P 500 earnings outlook improved as well: Second-quarter expectations now are for a 1.3 percent increase, sharply above the 3 percent decline expected at the start of last month.

Teshome said on its own China’s economy should not alarm Americans and is only one piece of the puzzle. If the answer is “yes”, then no action is required, other than perhaps adding to your position.

“This can all be intimidating”.

“What’s a company that’s doing business with China actually worth right now?”