US stock slump deepens as China woes lead to more selling

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U.S. stocks slipped Thursday on spreading fears about the health of China's economy. (WPVI)

U.S. stocks slipped Thursday on spreading fears about the health of China's economy, and financial and industrial stocks were among the hardest hit.

China's stock market sank about 7 percent Thursday after the yuan fell to its lowest level against the dollar since March 2011. Trading was automatically suspended as a result. That set off a slump in Asian and European stocks.

The Dow Jones industrial average skidded 220 points, or 1.3 percent, to 16,686 as of 12:30 p.m. Eastern. The Standard & Poor's 500 index lost 27 points, or 1.4 percent, to 1,963. The Nasdaq composite index fell 82 points or 1.7 percent, to 4,753.

Earlier the Dow was down more than 300 points.

The declines are broad as 2016 has started with a series of warning signs about the health of China's economy, the second-largest in the world. All 10 of the S&P 500 industrial sectors are trading lower. Financial stocks slumped and Citigroup gave up $1.67, or 3.3 percent, to $48.45. Industrial stocks fell, and aerospace company Boeing lost $3.31, or 2.4 percent, to $135.52 and railroad operator Union Pacific shed 76 cents, or 1 percent, to $74.07.

Apple, the world's largest publicly traded company, was among the tech stocks that declined. Its shares dipped 1.7 percent and touched their lowest price since October 2014.

Other global markets also fell. Germany's DAX slid 2.3 percent, the France CAC 40 gave up 1.7 percent, and Britain's FTSE 100 lost 2 percent.

China's stock market has skidded this year as the government prepares to remove measures that were introduced last year to prop up share prices after a meltdown in June. Economic reports caused investors to worry about China's manufacturing and service industries. Thursday's selling was linked to weakness in the yuan, as the government's decision to let the currency get weaker may be a bad sign for the health of China's economy.

China's market regulators said later Thursday that they will suspend a mechanism that automatically halts trading when stocks fall sharply. The halts, which went into effect at the beginning of the year, were triggered twice this week.

The price of oil continued a protracted slide. U.S. crude dipped 62 cents, or 1.8 percent, to $33.35 a barrel in New York. On Wednesday it closed at its lowest price since December 2008. Brent crude, a benchmark for international oils, lost 37 cents, or 1.1 percent, to $33.86 a barrel in London.

The price of gold and silver both rose more than 1 percent, with gold at $1,105.60 an ounce and silver at $14.20 an ounce. Those prices have been falling for years, but gold prices have recovered recently and are at their highest price in about two months.

The price of copper fell 2.6 percent, however. Copper producer Freeport-McMoRan lost 45 cents, or 7.3 percent, to $5.72. Its stock has plunged 84 percent over the last two years.

Homebuilder KB Home slumped after its fourth-quarter results fell short of Wall Street estimates. The stock declined 79 cents, or 6.7 percent, to $11.

Some retail stocks performed well. Macy's, which lost about half its value since July, rose $1.29, or 3.6 percent, to $37.44 after the company said it will close 40 stores and eliminate more jobs.

Teen retailer Zumiez raised its forecast for the fiscal fourth quarter, and its stock jumped $2.57, or 17.1 percent, to $17.65. Urban Outfitters climbed 68 cents, or 3.1 percent, to $22.60.

Jeweler Signet reported strong holiday-season sales, and its stock gained $7.02, or 5.5 percent, to $134.33.

The euro rose to $1.0870 from $1.0788. The dollar fell to 117.92 yen from 118.38 yen late Thursday. Bonds prices fell. The yield on 10-year Treasury bond edged up to 2.18 percent from 2.17 percent.
Related Topics:
financestocksfinancemoneychinau.s. & world
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