Wall Street opened sharply lower on Tuesday after weak data from China heightened fears of a slowdown in the world’s second-largest economy.
Data showed that China’s manufacturing sector shrank at its fastest pace in three years. The services sector, which has been one of the lone bright spots in the country’s economy, also showed signs of cooling.
The Dow Jones industrial average was lately down over 400 points, a drop of 2.4%. The broader Nasdaq Composite and the S&P 500 index also tumbled in the early going.
“With the weak data coming out, we’re going to see the negative sentiment from the last few weeks continuing,” said Joe Rundle, a senior sales trader at ETX Capital.
Wall Street ended lower on Monday and wrapped up its worst month since 2012 after comments from a senior Federal Reserve official appeared to indicate a U.S. interest hike in September.
Adding to the nervousness: the head of the International Monetary Fund, Christine Lagarde, said that global economic growth was now likely to be weaker than had been expected just a few months ago.
Oil prices fell 4% after the weak data from China, snapping three days of strong gains. Oil majors Chevron and Exxon were down about 2.5% in premarket trading.
Sales data released by major automakers is expected to show U.S. auto sales declined to 17.30 million vehicles in August from 17.55 million in July.
Yahoo (YHOO) shares were down after CEO Marissa Mayer announced she is pregnant with identical twin girls.
Alibaba (BABA), in which Yahoo has a stake, was also lower following the Chinese data.
Netflix (NFLX) fell after Variety reported that Apple (AAPL) was looking to move into the original programming business to compete with video streaming companies.