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US stocks pare losses after 1,000-point Dow plunge

Dealers at a local broking firm have all eyes on their trading terminals as they see the Sensex shoot past its all-time high - Kamlesh Pednekar.DNA.
Dealers at a local broking firm have all eyes on their trading terminals as they see the Sensex shoot past its all-time high - Kamlesh Pednekar.DNA.

New York: US investors got a serious jolt today when the Dow Jones industrial average tumbled 1,000 points minutes after the market opened in a wave of selling that circled the globe after a historic plunge in Chinese stocks.

Though the declines eased significantly as the morning went on, it sent a shiver of fear through Americans with retirement accounts or saving to buy a home that the bull market is over.

The Dow was down 199 points, or 1.2 per cent, to 16,259 points as of 12:51 p.M. Eastern time. The S&P 500 dropped 27 points, or 1.4 per cent, to 1,943. The Nasdaq composite fell 43 points, or 0.9 per cent, to 4,662 points. The three indexes are down for the year.

The Standard & Poor’s 500 index briefly slid into correction territory after the opening Wall Street jargon for a drop of 10 percent or more from a recent peak. The last market correction was four years ago. Treasurys surged as investors bought less risky assets.

The Dow fell 1,089 points within the first four minutes of trading as traders dumped shares. But the fire sale was short-lived. A wave buying cut the Dow’s losses by half just five minutes later.

Heightened concern about a slowdown in China had already shaken markets around the world on Friday, driving the US stock market sharply lower. A big sell-off in Chinese stocks today caused the rout to continue.

That’s left investors unsure of how to gauge which companies might be a good bet to weather a slowdown in China.

“What’s a company that’s doing business with China actually worth right now? When you’re not sure, you tend to sell,” said JJ Kinahan, TD Ameritrade’s chief strategist. China’s main index sank 8.5 per cent amid fears over the health of the world’s second-largest economy.

Oil prices, commodities and the currencies of many developing countries also tumbled on concerns that a sharp slowdown in China might hurt economic growth around the globe.

The market slide was broad. All the sectors in the S&P 500 headed lower, with consumer staples notching the biggest decline, 1.7 per cent.

Citrix Systems was down the most among stocks in the S&P 500, shedding USD 4.62, or 6.2 per cent, to USD 69.36. AGL Resources led among the gainers, rising USD 14.11, or 29.5 per cent, to USD 62.

In Europe, Germany’s DAX fell 4.7 per cent, while the CAC-40 in France slid 5.4 per cent. The FTSE 100 index of leading British shares dropped 4.7 per cent.

The Shanghai index suffered its biggest percentage decline since February 2007, with many China-listed companies hitting their 10 per cent downside limits. The benchmark has lost all of its gains for 2015, though it is still more than 40 per cent above its level a year ago.