Rough Start To 2016 For Wall Street After China Index Dives 7 Percent
NEW YORK (CBSNewYork/AP) -- The closing bell at the New York Stock Exchange capped off a rocky start to the New Year.
Traders were rattled by more signs of weakness in China's economy and escalating tensions between Saudi Arabia and Iran.
The Dow dropped more than 400 points in early trading, but recovered to end with a 276-point drop. The Nasdaq fell 104 points, and the S&P lost 31.
"It's a little unusual for us to have this much volatility this early in the year," Timothy Anderson, of TJM Investments, said.
It was the Dow's worst first-day drop in 84 years, Bloomberg Markets correspondent Matt Miller reported. At one point, the Dow was down 467 points.
China's main index plunged nearly 7 percent, triggering an emergency trading suspension. The drop was caused by weak Chinese manufacturing data and escalating tensions in the Middle East.
The halt was China's first ever use of circuit breakers. Circuit breakers are already used in several major markets, including those in the United States.
"China has new rules in place so that if they have a big drop - they have what's called a circuit breaker and the market stops trading - takes a breather, so that people can get their thoughts together go back in with, hopefully, a level head," Miller said. "That happened at a 5 percent drop -- they took a 15-minute break, and when they opened up, the market just continued to fall further. So after it fell 7 percent they just closed the stock market in China."
Investors were reacting to disappointing data showing a slowdown in manufacturing in China for a fifth straight month, CBS2's Alice Gainer reported.
European markets were also down significantly as investors saw signs that China's slowdown could continue well into 2016. European indexes fell between 2 and 4 percent.
"We saw the worst first day ever for European stocks," Miller reported.
Financial experts say it's important to stay calm.
"If you're the general public, you should go out to lunch, have a cold beer and a sandwich and not worry about it," Peter Tuchman, a NYSE trader, said.
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