China share plunge smacks world markets; S&P, Nasdaq in correction
By Sinead Carew
NEW YORK (Reuters) - A near-9 percent dive in China shares sent world stocks and commodity prices tumbling on Monday, and U.S. stocks ended a volatile day with the S&P 500 and Nasdaq composite indexes sliding into correction territory.
After dropping more than 1,000 points, or almost 7 percent, at Wall Street's open, the Dow Jones industrial average cut its losses but still finished down 3.6 percent. The Standard & Poor's 500 index closed down 3.9 percent for the day and was 11 percent lower than its May record high.
The benchmark S&P index has accumulated 9.95 percent of losses in just five sessions.
A key measure of U.S. equity volatility, the CBOE Volatility Index, or VIX, shot above the 50 mark for the first time since 2009, dropped back near 30 and then rose to 40.
Some U.S. investors went bargain hunting after the dip, causing at least some of the accelerated selling toward the day's end, according to Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.
"It's a very risky proposition to take things home overnight in this kind of a market. If you got a profit that quick, it's often safer to take a small profit than run the risk," said Frederick, "If things don't settle down in China we could have another ugly open tomorrow."
Hong Kong's Hang Seng index futures were down 2 percent and Nikkei futures were down 6 percent, suggesting there may be more losses in store when trading resumes in Asia on Tuesday.
European stocks closed off 5.4 percent after Asian shares slumped to three-year lows when a three-month-long rout in Chinese equities threatened to get out of hand. Continued...