U.S. stocks extended their three-month lows Thursday as a China-led rout continued to engulf equities around the globe.
In early afternoon on Wall Street, the Dow Jones industrial average was down nearly 322 points, about 2 percent, at 16,587.5. The Standard & Poor’s 500 index lost 39.4 points, about 2 percent, to 1,951.1. The Nasdaq composite fell 120.7 points, about 2.5 percent, to 4,716.6.
CRUDE ENERGY: The price of oil sank to its lowest level in 12 years as traders worried that the weakening of the world’s second-largest economy, would mean lower global demand for energy. In early afternoon, the price of U.S. crude oil was down 58 cents, about 1.7 percent, at $33.39 a barrel in trading on the New York Mercantile Exchange.
ON THE MOVE: Technology and health care companies paced the early retreat, with Microsoft Corp. and UnitedHealth Group Inc. falling more than 2.1 percent. Apple Inc. sank for a third day, down 1.9 percent, while Amazon.com Inc. slid 2.5 percent.
CHINA TRADING: Equity markets worldwide tumbled after Chinese stock exchanges closed less than a half-hour after opening, as a more than 7 percent plunge triggered a market-wide halt for the second time this week. European stocks tumbled as much as 3.6 percent.
“China devaluing its currency sparks concern that the global growth engine is starting to slow and that creates a dump of any highflying stocks or anything people perceive as risk,” said Yousef Abbasi, a market strategist at JonesTrading Institutional Services in New York. “When you start to worry about growth, you have crude oil down and it all ties together. It’s the new year and people are scratching their heads, they’re not quite ready to buy the dip.”
$2.5 TRILLION GONE: A flight from risky assets in the first week of the new year has wiped more than $2.5 trillion from global equities, made worse by China’s central bank cutting its yuan reference rate for an eighth straight day. China’s tolerance for a weaker yuan is being seen as evidence policy makers are struggling to revive an economy that’s the world’s biggest consumer of energy, metals and grains.
The move revived the angst that sent financial markets into turmoil last summer, driving U.S. stocks to three-month lows yesterday in a sell-off led by commodity producers. Comments by billionaire George Soros exacerbated market jitters after he told an economic forum in Sri Lanka today that global markets are facing a crisis and investors need to be very cautious.