Bears on a roll: Dow ends down 588 after a 1,000-point sell-off

New York • U.S. stocks slid Monday, with the Dow Jones industrial average briefly plunging more than 1,000 points in a sell-off that sent a shiver of fear from Wall Street to Main Street.

Stocks regained some of that ground as the day wore on, but the Dow finished with a loss of 588 points, the eighth-worst single-day point decline and the second straight fall of more than 500.

Chinese stocks have plunged again Tuesday. The Shanghai Composite Index fell as much as 6.4 percent to 3,004.13 in the first minutes of trading Tuesday.

The index later trimmed its losses and was down 5 percent to 3,050.10.

The index tumbled 8.5 percent Monday, triggering a wave of big declines on stock markets around the world, including the Dow, which fell 3.6 percent.

The smaller Shenzhen Composite Index also slumped more than 6 percent in early trading.

Other Asian markets were rebounding. Japan's Nikkei reversed early losses, rising 0.5 percent to 18,620.89. Hong Kong's Hang Seng added 1.1 percent to 21,489.11. South Korean and Australian stocks also gained.

The slump — part of a global wave of selling touched off by signs of a slowdown in China, the world's second-largest economy — triggered worries among Wall Street professionals and ordinary Americans who are saving for retirement or a down payment on a house.

The Dow ended up losing 588.40 points, or 3.6 percent, closing Monday at 15,871.35. But as scary as the sell-off was, the Dow's decline doesn't even make the list of the Top 10 biggest drops in percentage terms.

The Standard & Poor's 500 index slid 77.68 points, or 3.9 percent, to 1,893.21, and is now in "correction" territory, Wall Street jargon for a drop of at least 10 percent from a recent peak. The last market correction was nearly four years ago.

The Nasdaq composite shed 179.79 points, or 3.8 percent, closing at 4,526.25.

All three major indexes are down for the year.

"There is a lot of fear in the markets," said Bernard Aw, market strategist at IG.

U.S. stocks have been on a bull run for more than six years, after bottoming out in March 2009 in the aftermath of the financial crisis and the Great Recession.

The rout began in China last week and continued on Monday, when the country's main stock index sank 8.5 percent. China is facing a slowdown in economic growth, the banking system is short of cash, and investors are pulling money out of the country.

China concerns aside, U.S. stocks have been primed for a sell-off for several months, said Jim Paulsen, chief investment strategist and economist for Wells Capital Management.

"I've been of the view since late last year that this market is in a vulnerable position," he said. "It's gone almost straight up for six years."

Stocks have kept rising even as corporate earnings growth has slowed. The price-earnings ratio for the S&P 500, a measure of how much investors are willing to pay for each dollar of company earnings, climbed as high as 17.2 in March.

That was the highest level in at least a decade, according to FactSet.

The Dow plummeted 1,089 points Monday within the first four minutes of the opening bell as traders dumped shares. But a wave of buying by bargain-hunters cut the Dow's losses by half just five minutes later.

The U.S. market slide was broad. The 10 sectors in the S&P 500 headed lower, with energy stocks recording the biggest decline, 5.2 percent, amid a slump in the price of oil. The sector is down almost 25 percent this year.

U.S. Treasurys surged as investors bought less risky assets. The yield on the benchmark 10-year note fell to 2.01 percent from 2.04 percent.

Oil, commodities and the currencies of many developing countries also tumbled on concerns that a slowdown in China might hurt economic growth around the globe. Crude oil closed below $40 a barrel for the first time since early 2009. Gold and silver also fell.

In Europe, Germany's DAX stock index fell 4.7 percent, while the CAC-40 in France slid 5.4 percent. The FTSE 100 index of leading British shares dropped 4.7 percent.