Higher bond yieldsweigh on markets

Worries about China’s distressed economy also contribute to markets finishing down 5.7 percent.

More signs of distress in China’s economy and rising bond yields led to a broad sell-off in stocks Monday, leaving the market down 5.7 percent from its all-time high last month.

It’s the first pullback of 5 percent or more since November.

U.S. trading started with a slumpMonday. The market recovered much of its loss, then fell back toward steeper losses again. By the close of trading, the big stock indexes were clinging to modest gains for the second quarter. The last day of trading for the quarter is Friday.

Things were rough for stock investors in the morning. An overnight plunge in China caused by a spike in lending rates led to declines in Europe. China’s Shanghai Composite Index fell 5 percent, its biggest decline in four years. The dropwas prompted by a government crackdown on off-balance sheet lending, which made investorsworry about China’s economic growth. Then France’s benchmark stock index fell 1.7 percent and Germany’s 1.2 percent.

U.S. traders took one look at that and sold. The Dow Jones industrial average fell as much as 248 points in the first hour of trading. The yield on the 10-yearTreasury note spikedtoits highest in almost twoyears as the sell-offbroughtdownprices ofU.S. government debt. Gold and other metals also fell.

Stocks got closer to break-even around midday before falling again in the last hour. The Dowfin- ished down 139.84 points, or 0.9 percent, at 14,659.56. The S&P 500 index fell 19.34 points, or 1.2 percent, to 1,573.09. TheNasdaq dropped 36.49 points, or 1.1 percent, to 3,320.76.

All 10 industry groups in the S&P 500 fell. The biggest drop was 1.8 percent for bank and financial stocks. Bank of America fell the most among major bank stocks, giving up 39 cents, or 3.1 per- cent, to $12.30.

Pullbacks that occur during bull markets tend to be “nasty and brutish”— but short, said John Manley, chief equity strategist at Wells Fargo Funds Management. He said it’s common to get declines of 3 percent to 7 percent “as the market restores a reverence to risk to the investing public.”

The last time the U.S. stock market had a fullblown correction— defined as a drop of at least 10 percent from a peak— was July 22-Oct. 3, 2011, when the S&P 500 fell 18.3 percent. That fall was caused by concern that a fight betweenU.S. lawmakers about extending the debt ceiling would push the U.S. into default.