Dow Jones Industrial Average Plummets More Than 1,000 Points at Open
25 August 2015 - 12:24AM
Dow Jones News
By Saumya Vaishampayan And Corrie Driebusch
The Dow Jones Industrial Average plummeted more than 1,000
points at the open Monday, a dramatic dive on a day when
intensifying growth fears sparked steep stock-market losses
world-wide.
The blue-chip benchmark dropped as much as 1089 points before
paring some of its losses. It was recently down 603 points, or
3.7%, to 15858.
The S&P 500 dropped 99 points, or 5%, to 1872, entering
correction territory. The Nasdaq Composite fell 371 points, or
7.9%, to 4335.
Before the market opened, Dow futures, S&P 500 futures and
Nasdaq 100 futures triggered circuit breakers after falling at
least 5%.
The New York Stock Exchange operator NYSE Group Inc. invoked the
rarely used "Rule 48," which relaxes some trading rules in a bid to
ensure a smooth opening to trading. The rule is instituted when
trading before the start of the regular session is especially
volatile.
At the market open on Monday, a slew of single stocks and
exchange-traded products triggered single-stock circuit breakers,
which are initiated when there is a price drop of 10% or more in a
five-minute period.
Fresh signs of a slowdown in China, the world's second largest
economy, have jolted stocks, bonds, currencies and commodities in
recent days. Investors were further rattled Monday by the lack of
fresh steps to stem the selloff over the weekend from Chinese
authorities.
The Wall Street Journal reported that the Chinese central bank
was preparing to flood the banking system with liquidity to
increase lending, the latest in a series of measures designed to
give the flagging economy a boost.
"A lot of markets abroad have seen a low amount of liquidity so
investors are turning to the U.S. market to hedge," said Jeffrey
Yu, head of single-stock derivatives trading at UBS AG. Before the
market opened, traders said futures volumes were extraordinarily
heavy.
While the selloff began as an emerging markets story, with
China's stock market offering very little liquidity to investors
due in part to technical stock-trading halts, investors have had to
turn to the most liquid market to sell, which is the U.S., Mr. Yu
said.
The Dow Jones Industrial Average, which has heavy international
exposure, entered correction territory on Friday, defined as a
decline of 10% from a recent peak.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com and
Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
August 24, 2015 10:09 ET (14:09 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.