U.S. stocks fall on fears over China

U.S. stocks tumbled to two-month lows Wednesday as fears about China’s economy slowing down led to more widespread selling. The price of oil plunged to its lowest level since 2008 on the prospect that global demand could fall further.

For the second time in three days, markets slumped on concerns that the world’s second-largest economy is stumbling. A monthly survey of China’s service industries slipped to a 17-month low. That helped knock the price of oil lower, since China is a major consumer of energy.

Global markets were also rattled after North Korea said it had conducted its first successful test of a hydrogen bomb.

The Dow Jones industrial average dropped 252.15 points, or 1.5%, to 16,906.51. The Standard & Poor’s 500 index lost 26.45 points, or 1.3%, to 1,990.26, for its fourth loss in five trading days. The Nasdaq composite slipped 55.67 points, or 1.1%, to 4,835.76.

U.S. benchmark crude sank $2, or 5.6%, to $33.97 a barrel in New York, its lowest price since December 2008. Brent crude fell $2.19, or 6%, to $34.23 a barrel in London.

Southwestern Energy fell 96 cents, or 12.6%, to $6.69, and Marathon Oil declined $1.48, or 11.6%, to $11.28.

Scott Wren, senior global equity strategist for the Wells Fargo Investment In- stitute, said the market was overreacting to the latest signs of weakness in China.

“Stocks are not trading on fundamentals,” Wren said. “They’re trading on fear that Chinese growth is going to collapse and that these lower oil prices are going to lead to a growing number of defaults in the highyield bond market.”

The Shanghai composite index rebounded 2.3% as the Chinese government said it would keep some market-stabilizing measures in place.

U.S. government bond prices rose Wednesday as the turbulent stock market made bonds more appealing. The yield on the 10-year Treasury note fell to 2.17% from 2.24%.

Other energy prices also slipped. Wholesale gasoline sank 9.5 cents, or 7.6%, to $1.162 a gallon after the U.S. government said inventories of gas climbed 10.6 million barrels last week. Citi Investment Research analyst Edward Morse said that was the biggest weekly increase since 1993.

Heating oil sank 4.5 cents, or 4%, to $1.081 a gallon. Natural gas declined 5.6 cents, or 2.5%, to $2.267 per 1,000 cubic feet.

The euro edged up to $1.0788 from $1.0744. The dollar fell to 118.38 yen from 118.97 yen late Tuesday.

The price of gold rose $13.50, or 1.3%, to $1,091.90 an ounce. Silver inched up half a cent to $13.976 an ounce. Copper slid 0.8 of a cent to $2.088 a pound.