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Wall Street sinks as China fears grow, oil slides further

China allowed the biggest fall in the yuan in five months.

Delhi: U.S. stocks extended recent sharp losses on Thursday, putting the Dow on track for its worst start to a year in more than a century, as market volatility in China and a relentless slide in oil prices rattled investors.

China allowed the biggest fall in the yuan in five months, and Shanghai stocks were halted for the second time this week after another brutal selloff tripped a newly-imposed circuit breaker. The Shanghai and Shenzhen stock exchanges, however, said China would suspend the circuit breaker as of Friday.

With Beijing accelerating the yuan`s depreciation to make its exports more competitive, investors fear the world`s second-largest economy is even weaker than had been imagined.

Adding to the gloom, oil prices fell to near 12-year lows and copper prices touched their lowest since 2009, weighing on energy and material shares. All 10 S&P 500 sectors were lower, though.

"People see the weakness in China and in the overall equity market and think there`s going to be an impact on corporations here in the United States," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

"When you have a market that begins a year with weakness, people are sort of suspect anyway. The economy isn`t moving all that well, the outlook is modest at best, and they don`t want to wait for the long term. China creates more uncertainty."

At 2:49 p.m., the Dow Jones industrial average was down 323.65 points, or 1.91 percent, to 16,582.86, the S&P 500 lost 38.28 points, or 1.92 percent, to 1,951.98 and the Nasdaq Composite dropped 117.56 points, or 2.43 percent, to 4,718.21.

The S&P 500 was on track for its worst start to a year since 1928.

The CBOE Volatility Index, the market`s favoured gauge of Wall Street anxiety, was up 22.3 percent at 25.19, its highest level in about three weeks.

Billionaire investor George Soros, speaking at an economic forum in Sri Lanka, drew similarities between the present environment and the financial crash of 2008.
He said global markets were facing a crisis and investors needed to be very cautious, Bloomberg reported.

Yahoo fell 6.1 percent to $30.20 after Business Insider reported the company was working on a plan to cut its workforce by at least 10 percent. Alibaba , in which Yahoo has a stake, was down 6.6 percent at $72.25.

Declining issues outnumbered advancing ones on the NYSE by 2,676 to 410, for a 6.53-to-1 ratio on the downside; on the Nasdaq, 2,431 issues fell and 418 advanced for a 5.82-to-1 ratio favoring decliners.

The S&P 500 posted 1 new 52-week highs and 79 new lows; the Nasdaq recorded 14 new highs and 283 new lows.