U.S. Stocks Pare Losses After 1,000-Point Dow Plunge

NEW YORK (AP) – U.S. investors got a serious jolt Monday 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, the market plunge 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 282 points, or 1.7 percent, to 16,176 points as of 1:54 p.m. Eastern time. The S&P 500 dropped 39 points, or 2 percent, to 1,931. The Nasdaq composite fell 72 points, or 1.5 percent, to 4,663 points. The three indexes are down for the year.

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         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 U.S. stock market sharply lower. The rout continued Monday as China's main stock index sank 8.5 percent.

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         The prospect of a slowdown in the world's second-largest economy has left investors unsure of how to gauge which companies might be a good investment.

         "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.

         The U.S. market slide was broad. The 10 sectors in the S&P 500 headed lower, with energy stocks notching the biggest decline, 2.8 percent. The sector is down 23.5 percent this year.

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         Citrix Systems was down the most among stocks in the S&P 500, shedding $5.26, or 7.1 percent, to $68.65. AGL Resources led among the gainers, rising $13.92, or 29.1 percent, to $61.78.

         China growth concerns aside, U.S. stocks have been primed for a sell-off for several months, said Jim Paulsen, chief investment strategist and economist for Wells Capital Management.

         "I've been of the view since late last year that this market is in a vulnerable position," Paulsen said. "It's gone almost straight up for six years."

         Stocks have been on a bull run of more for more than six years, after bottoming out in March 2009 in the aftermath of the financial crisis and the Great Recession.

         Stocks have kept climbing even as corporate earnings growth has slowed. The price-earnings ratio for the S&P 500, a measure of how much investors are willing to pay for each dollar of company earnings, climbed as high as 17.2 in March. That was the highest level in at least a decade, according to data from FactSet.

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

         Benchmark U.S. crude dropped $1.41, or 3.5 percent, to $39.03 a barrel in New York. It fell 87 cents a barrel on Friday. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $2.50 to $42.96 a barrel.

         The big slump in commodity prices could turn out to be a boost for economies throughout the world, though.

         "Everyone is getting the equivalent of a massive tax cut," said Paulsen. "This is more of a stimulative event for the global economy."

         Worries about a China-fueled global economic slump sent markets overseas lower.

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

         In Asia, Japan's Nikkei fell 4.6 percent, its worst one-day drop since in over two and a half years. Hong Kong's Hang Seng index fell 5.2 percent, Australia's S&P ASX/200 slid 4.1 percent and South Korea's Kospi lost 2.5 percent.

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

         Underlying the gloom in China is the growing conviction that policymakers and regulators may lack the means to stem the losses in that nation. The country is facing a slowdown in economic growth, the banking system is short of cash and investors are pulling money out of the country, experts note.

         "There is a lot of fear in the markets," said Bernard Aw, market strategist at IG.

         In currency trading, the dollar was at 119.25 yen on Monday, down from 122.05 yen on Friday. The euro rose to $1.1532 from $1.1138. Currencies fell hard in developing economies — particularly those that rely heavily on the export of commodities and oil, both of which China is a big consumer.

         U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.03 percent.

                    – by AP Reporters Alex Veiga and Steve Rothwell




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