Dow plummets 1,000 points at open as global selloff deepens

NEW YORK (AP) — America's stock market is getting absolutely crushed. The Dow plunged as much as 1,000 points at the open and the S&P 500 sank into correction territory on Monday as global fears about China's economic turbulence mounted.

Stocks have bounced off the lowest levels of the day. The Dow is now down about 650 points.

To put the losses into perspective, the Dow has never closed down more than 800 points in a single day. Based on percentage losses, the Dow is down more than 4%. That means it's on track for its worst selloff since 2011, when the U.S. lost its AAA rating.

"We have not seen this level of full-blown panic in markets for quite some time," said Peter Kenny, chief market strategist at Clear Pool Group, a financial technology firm.



It all started with Shanghai's 8.5% drop

The wave of selling began overseas. China's Shanghai Composite plummeted 8.5%, wiping out all of its massive gains so far this year. Not only has an apparent bubble in Chinese equities popped, but the country's economy may be slowing more than feared.

Last week's big selloff gathered serious momentum after China said its manufacturing activity -- a critical metric on growth -- tumbled to a six-year low in July.

Fears of China contagion

China is the world's second-biggest economy. Its explosive growth in the last two decades has been the engine for the global economy. Its enormous appetite for raw materials like oil, copper and iron ore fueled global growth, especially in emerging markets like Brazil that are rich in natural resources.

But that story has been completely derailed by China's economic slowdown. Just how much China slows down matters greatly to investors.

All U.S. stock market indexes are in correction

Fears have grown so much about the health of China's economy that the S&P 500, made up the largest U.S. companies, is now sitting in "correction" territory -- a 10% decline from a recent peak.

Both the Dow and Nasdaq slipped into correction mode on Friday, the first since 2011.

But stocks are up about 200% since crisis

It's worth remembering that these steep losses come after a tremendous bull run.

The S&P 500 has skyrocketed 220% since bottoming out at 666 during the Great Recession in March 2009. At its lows on Monday, it was at 1,866.86.

Oil continues downward march too

Crude oil plunged below $39 a barrel on Monday for the first time since 2009. A global economic slowdown is eating into demand for oil at a time when supplies remain extremely elevated.

10-year yield below 2%

Another sign of fear: The 10-year Treasury yield slid below 2% on Monday. That's the lowest level since April and a sign that investors are fleeing to the relative safety of American government debt.

It also signals that Wall Street believes the Federal Reserve may have to delay its expected interest rate hike from September until later in the year or even 2016.