U.S. stocks moved sharply lower early Thursday following steep market declines all around the world as concerns about global economic weakness intensified. Financials stocks were among the biggest decliners as investors worried that interest rates in the U.S. and elsewhere would remain low.
KEEPING SCORE: The Dow Jones industrial average fell 173 points, or 1.1 percent, to 15,741 as of 10:02 a.m. Eastern Time. The Standard & Poor’s 500 lost 17 points, or 1 percent, to 1,834. The Nasdaq composite shed 23 points, or 0.6 percent, to 4,259.
GLOBAL JITTERS: Investors are increasingly worried that the mounting market turmoil could put a brake on the global economy at a time it is already struggling with a litany of issues — from China’s slowdown, low inflation and plunging energy markets. Fed Chair Janet Yellen, giving her semiannual report to Congress on Wednesday, cautioned that global weakness and falling financial markets could depress the U.S. economy’s growth. That could, in turn, slow the pace of Fed interest rate hikes. Yellen was scheduled for a second day of testimony before U.S. lawmakers on Thursday.
BANK SLUMP: Several major banks were trading lower. Citigroup fell $1.73, or 4.6 percent, to $35.68, while JPMorgan slid $2.08, or 3.7 percent, to $53.44. Bank of America shed 62 cents, or 5.2 percent, to $11.36. Wells Fargo lost $1, or 2.2 percent, to $45.17.
MORTGAGE HANGOVER: Morgan Stanley fell 4 percent after it agreed to pay $3.2 billion to settle federal and state claims that the lender engaged in practices that contributed to the 2008 financial crisis, including misrepresentations about the value of mortgage-backed securities. The stock slid 79 cents to $21.91.
STRONG QUARTER: Cisco Systems jumped 8.8 percent a day after the seller of routers, switches, software and services reported better-than-expected quarterly results and announced a stock buyback plan and dividend increase. The stock climbed $1.97 to $24.49.
OVERSEAS MARKETS: In Europe, Germany’s DAX dropped 1.8 percent, while France’s CAC 40 slid 2.8 percent, dragged down by a 13 percent drop in the shares of bank Societe Generale, which warned about its profits. Britain’s FTSE 100 shed 1.5 percent. In Asia, some indexes reopened after a holiday and caught up with several days of market turmoil. Hong Kong’s Hang Seng dived 3.9 percent after opening as much as 5 percent lower. South Korea’s Kospi staged its biggest daily drop in nearly four years, down 2.9 percent. China and Taiwan will reopen on Monday. Japan was closed Thursday for a separate public holiday.
ENERGY: Benchmark U.S. crude oil was down 56 cents, or 2.1 percent, to $26.86 a barrel in New York. The contract lost 49 cents on Wednesday. Brent crude, a benchmark for international oils, was down 31 cents, or 1 percent, to $30.53 a barrel in London.
BONDS AND CURRENCIES: Bond prices rose. The yield on the 10-year Treasury slid to 1.60 percent from 1.71 percent late Wednesday. In currency markets, the dollar took a dive as investors adjusted their expectations for fewer interest rate increases in the U.S. It fell to 112.26 yen from 113.35 yen. It also fell against the euro, which was up to $1.1342 from $1.1282.
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