Stocks nose-dived at the opening bell Monday on Wall Street. Within minutes of the first trades, the Dow Jones industrial average plunged 1,000 points.
The decline extended the losses of last week, already the worst for the stock market in four years.
Investors grew nervous two weeks ago when China devalued its currency, raising concerns that the world’s second-largest economy — a huge market for American products — is not nearly as healthy as it appeared.
Stocks quickly bounced back somewhat, and a half-hour into trading the Dow was down about 600 points. The biggest single-day point decline for the Dow was 777 points, during the financial crisis in September 2008.
The low point for the Dow on Monday morning was a decline of 1,089 points, or 6.6 percent. That is nowhere near the drops of the stock market crashes of 1929 and 1987. But it was more than enough to get investors’ attention.
It also got the attention of Lawrence Summers, the former treasury secretary.
Few stocks were immune as the free-fall extended to the biggest names in American commerce. General Electric fell 11 percent, Verizon 12 percent and Apple 11 percent.
The Standard & Poor’s 500 index, a broader gauge of the overall market, fell more than 5 percent, and the Nasdaq, heavy with technology stocks, fell more than 8 percent.
The sell-off on Monday swept west across the globe. Stocks closed down more than 8 percent in Shanghai and more than 4 percent in Tokyo. Markets in London, Paris and Frankfurt were all down more than 4 percent.
“It is going to be a bad day,” CNBC’s Jim Cramer said on TODAY. “It’s probably going to be a bad week.”
There was no immediate reaction from the White House, but the jolt to the market shook the presidential campaign.
The worldwide market decline has extended to commodities, including crude oil, which is below $40 per barrel for the first time since the financial crisis six years ago.
That is good news for drivers — the national average for gasoline is $2.59 a gallon, down 14 cents in a month — but bad news for energy stocks, which make up a significant chunk of Americans’ retirement portfolios, and state economies that depend on oil.
Traders have been putting their money in investments they consider safer, including government bonds and gold.
The Dow opened Monday’s trading at 16,459, down more than 10 percent from its all-time high in May. That is the definition of a market correction.
The market’s last correction was in April 2011. Cramer pointed out that the American economy is much healthier than it was then. Unemployment in April 2011 was 9.1 percent, compared with 5.3 percent today.
He also cautioned that some of the factors that could send the U.S. market far lower are unlikely — a big rise in unemployment, a spike in interest rates or inflation, or a banking crisis.
For now, though, “There is just a tremendous decline coming from China,” he said, “and we are importing it.”