Stocks sink on fears about Middle East, China

The new year got off to an inauspicious start on Wall Street as stocks tumbled Monday in a global sell-off triggered by new fears of a slowdown in China and rising tensions in the Middle East.

The Dow Jones industrial average clawed back from a steep early decline but still ended down 1.6 percent, its biggest loss in two weeks. Markets in Asia and Europe were down more.

The wave of selling on the first trading day of 2016 served as a reminder that worries over the fragile global economy that weighed on financial markets last year are not going away anytime soon.

“It’s going to be a turbulent year,” said Kevin Kelly, chief investment officer of Recon Capital Partners. “This isn’t a blip.”

The trouble started in China, where weak manufacturing figures in the world’s second-largest economy sent the Shanghai Composite Index plunging 6.9 percent before Chinese authorities halted trading.

The slowdown in China is worrisome around the globe because the country’s manufacturers are huge buyers of raw materials, machinery and energy from other countries. Also, many automakers and consumer goods companies are hoping to sell more to increasingly wealthy Chinese households.

Investors also were unnerved by heightened tensions between Saudi Arabia, a huge oil supplier, and Iran. Saudi Arabia executed a prominent Shiite cleric, prompting Iranian protesters to set fire to the Saudi Embassy in Tehran on Sunday. The price of oil swung wildly.

In the U.S., the Dow slumped 276.09 points to 17,148.94. It was down as much as 467 points earlier in the day. The Standard & Poor’s 500 index lost 31.28 points, or 1.5 percent, to 2,012.66. The Nasdaq composite fell 104.32 points, or 2.1 percent, to 4,903.09.

Benchmark U.S. crude fell 28 cents to close at $36.76 a barrel on the New York Mercantile Exchange. Brent crude, the international standard, edged down 6 cents to close at $37.22 a barrel in London.

Bond prices rose, sending yields lower. Investors tend to park money in U.S. government bonds when they are fearful of weak economic growth or turbulence in stocks and other markets. The yield on the 10-year Treasury note fell to 2.24 percent from 2.27 percent.

In metals trading, gold rose $15 to $1,075.20 an ounce, silver lost 4 cents to $13.84 an ounce and copper fell 6 cents to $2.08 a pound.

STOCK WATCH: DR Horton

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