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Dow closes down 470 points; oil price drops more than 8 percent

The facade of the New York Stock Exchange

The facade of the New York Stock Exchange on Wall Street on Aug. 24, 2015. Credit: AP / Seth Wenig

U.S. stocks lost about 3 percent Tuesday in a worldwide sell-off as gloomy new economic data from China increased concerns that China's slowdown will sack the global economy. The Dow Jones industrial average fell 300 points at the opening bell and by early afternoon was down more than 400. As markets closed, the price of U.S. oil was down more than 8 percent.

At the close on Wall Street, the Dow had given up 469.7 points, about 2.8 percent, to 16,058.3. The Standard & Poor's 500 index was down nearly 58.3 points, nearly 3 percent, at almost 1,914. The Nasdaq composite index lost 140.4 points, nearly 3 percent, to 4,636.1.

ENERGY: About the same time, the price of benchmark U.S. crude fell $4.15, about 8.4 percent, to $45.05 a barrel in electronic trading on the New York Mercantile Exchange. It had closed at $49.20 on Monday after the U.S. Energy Department cut its oil output estimate.

CHINA MANUFACTURING: An official index of Chinese manufacturing fell to a three-year low last month in another sign of slower than expected growth in the world's No. 2 economy. The manufacturing index based on a survey of factory purchasing managers fell to 49.7 points in August from 50.0 in July, indicating a contraction.

"The problem is, as much as China is the catalyst for this, it's also that we're seeing weakness in fundamentals here," said analyst Matt Maley, an equity strategist at Miller Tabak & Co. in Manhattan. "A lot of company earnings were hurt by China in the second quarter, and it's only gotten worse. People are losing confidence with the whole situation there breaking down, not just in the stock market but in data as well."

International Monetary Fund Managing Director Christine Lagarde said Tuesday the global expansion outlook is worse than the lender anticipated less than two months ago. "This reflects two forces: a weaker than expected recovery in advanced economies, and a further slowdown in emerging economies, especially in Latin America," Lagarde said in a speech in Jakarta, Indonesia.

GOODBYE AUGUST: August was a miserable month for investors. Worries over China's slowdown and the timing of an interest rate hike by the Federal Reserve pushed shares sharply lower before moves by the Chinese central bank helped to stabilize the markets, at least temporarily. The Standard & Poor's 500 still finished August down 6.3 percent, its worst showing since May 2012.

Reports from Bloomberg News and The Associated Press were used in this story.

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