LONDON: U.S. stocks plummeted Tuesday as concerns that the Chinese and American economies were cooling and fears that shares were overvalued sparked a global market decline. At one point the Dow industrial average was down more than 546 points, or 4.3 percent, at 12,086, but it recovered some ground in the last 90 minutes of trading to close at 12,216.24, down 416.02 points, or 3.3 percent, the worst drop since Sept. 17, 2001. The Dow rose last week to both a closing and an intraday record.The broader Standard & Poor's 500 index lost 50.33 points, or 3.5 percent, to close at 1,399.04, and the Nasdaq composite tumbled 96.65, or 3.9 percent, to finish at 2,407.87.
A 9 percent slide in Chinese stocks — coming one day after investors sent the Shanghai benchmark index to a record close — set the tone for U.S. trading. Major West European indexes were down by between 2 percent and 3 percent.
Investors said negative news on the U.S. economy had exacerbated the stock declines in America and Europe. The Commerce Department said Tuesday that durable goods orders at American factories fell 7.8 percent in January, more than double what analysts had expected, on average. The disappointing numbers also came a day after Alan Greenspan, the former chairman of the Federal Reserve, was quoted as saying there were signs the economy could be heading for a recession.
"It looks more and more like the economy is a slow-growth economy," Michael Strauss, chief economist at Commonfund, told The Associated Press, noting that investors were expecting the government on Wednesday to revise its estimate of fourth-quarter gross domestic product growth down to an annual rate of about 2.3 percent from an initial 3.5 percent. But some analysts said it remained unclear whether the global sell-off constituted a correction or a broader collapse.
"We believe this is just short-term and more of a challenge for those who are not yet in equities," said Thomas Körfgen, head of equities at SEB in Frankfurt. "I do not see a threat yet to the global market, as the fundamentals are positive."