LONDON: U.S. stocks closed down sharply Tuesday after disappointing manufacturing data in China reignited investors’ concerns about the global economy.
All of the major indices fell nearly 3 percent Tuesday and are in negative territory for the year.
Markets were shaken by a report that manufacturing activity in China, the world’s second-largest economy, was at its lowest level in three years. That helped spark a global sell-off.
“People are worried that China is going to drag all of us into a global recession,” said Joe Fath, manager of the T. Rowe Price Growth Stock Fund.
The Dow Jones industrial average dropped 470 points, or 2.8 percent. The decline sent the Dow back into correction territory, meaning the index is down at least 10 percent from its most recent high. The Standard & Poor’s 500-stock index fell 58 points, or 3 percent. The tech-heavy Nasdaq tumbled by 2.9 percent.
Abroad, the STOXX Europe 600 index fell 2.7 percent Tuesday. In China, the Shanghai Composite Index declined 1.2 percent.
Worries of a global slowdown were also fueled by comments from Christine Lagarde, managing director of the International Monetary Fund. In a speech at the University of Indonesia, Lagarde was positive about growth in Asia, the “region is still expected to lead global growth.” But she also cautioned that the market volatility could further slow growth.
“Other emerging economies, including Indonesia, need to be vigilant to handle potential spillovers from China’s slowdown and tightening of global financial conditions,” Lagarde said.
