US stocks ended lower with the Dow Jones Industrial Average sinking to its lowest level since October on concerns that the deceleration in the China’s economy would translate into a slowdown of the global economy.
The Dow Jones Industrial Average ended more than 358.04 or 2.1% lower at 16,990.90, its biggest one day loss since February 3rd 2014.
This was the first time the blue chip index had closed below the psychologically significant 17,000 point level since September 2014.
The S&P 500 Index shed 43.88 points or 2.1% to end at 2,035.70 points, well below its 200 day average. The benchmark index also turned negative for the year ending more than 1.1% below its close at the end of 2014.
The technology heavy Nasdaq Composite ended 141.56 points or 2.8% lower at 4,877.89 points, its biggest one day decline since April 10 2014.
“The weakness, up until today, has been focused on materials, industrial and energy stocks—it’s been relatively contained,” Ralph Bassett, head of North American Equities at Aberdeen Asset Management, which oversees $483 billion, told the Wall Street Journal.
“Now, you’re seeing consumer and technology stocks starting to be pulled in.”
The broad based selloff, which saw the country’s main indexes turn negative for the year’ saw heavy selling in technology, media and consumer discretionary shares.
The Yuan devaluation last week has continued to see Chinese stocks continue their slide with the Shanghai Composite falling by more than 8% for the week so far after Beijing warned that Wednesday’s concerns would continue to slide in coming months.
“There is heightened uncertainty that began with yuan devaluation last week, while overall China’s growth is slowing faster than thought. This is weighing on confidence,” Randy Frederick, managing director of trading & derivatives at Schwab Center for Financial Research, told Market Watch
Also weighing stocks down were minutes from the Federal Reserve’s policy meeting which showed that most of the policymakers were uncomfortable over the state of the global economy as the rout in commodities spilled over to stocks.
To contact the reporter of the story: Samuel Rae at email@example.com