Stocks dive; Dow closes down 326 points

Traders work on the floor of the NYSE Traders work on the floor of the NYSE on Friday, Jan. 31, 2014. Photo Credit: Getty Images / Spencer Platt

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The Dow Jones industrial average tumbled 326 points Monday, extending a four-week slump that's prompted investors on Long Island and beyond to make tough choices about whether to sell or wait for a rebound.

Monday's loss came as reports of sluggish U.S. growth added to ongoing investor worries about the global economy. It followed the worst January performance since 2009 for the Dow, which has dropped 1,203 points, or 7.3 percent, since its Dec. 31 peak.

"It's a bit painful for investors to see the equities markets drop as they have," said Chris Gaffney, a senior market strategist at EverBank. "We've been almost 21/2 years without a 10 percent correction."

The market stumbled from the get-go Monday, with U.S. markets opening lower after declines in European and Japanese indexes. Then it quickly turned into a slide, greased by discouraging economic data on everything from manufacturing to auto sales to construction spending.

By late afternoon the sell-off accelerated. The Standard & Poor's 500 index was down more than 5 percent on the year.

Not all investors are selling. Paul Caplan, who lives in East Northport and has played the market for 30 years, said he ignores market fluctuations and prognosticators.

"Do not listen to the market reports daily" or look at your portfolio regularly, said Caplan, who is 55 and retired from running an interior design business. "Just let it do its thing and be patient. It only matters when you actually need the money."

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All told, the Dow tumbled 326.05 points, or 2.08 percent, to 15,372.80. It had fallen 342 points earlier in the afternoon. The S&P 500 lost 2.28 percent to close at 1,741.89. The Nasdaq composite index fell 2.61 percent to 3,996.96.

The markets are being squeezed on two primary fronts. At home, investors are worried about the Federal Reserve's commitment to withdraw its stimulus program. And abroad, concerns focus on the growth of emerging markets -- particularly China, which appears to be losing some of its economic steam.

Signs of worry abounded throughout the market Monday. The VIX index, a measure of stock market volatility, rose to its highest level since December 2012. Investors shifted into U.S. government bonds, pushing yields lower and continuing their sharp decline since the start of the year. Bond yields and prices move in opposite directions.

Martin Blumberg, who lives in Melville, said he pulled out of the market in time to beat the slump. Heeding warnings of a looming correction, he sold off roughly half his stock holdings late last year.

"I decided to keep my money on the sideline waiting for this correction," said Blumberg, who is 72 and retired from running a family auto-parts shop. "I want to get back in. But I will wait until it drops at least 10 percent."

With wire service reports

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