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Markets close rocky trading day down 1 percent as oil prices plummet

 
Published Jan. 21, 2016

NEW YORK — Global markets staged a wild ride Wednesday amid fears of cratering oil prices and slowing international growth, extending a turbulent streak that has wiped out more than $2 trillion in value from American companies this year.

Investors were unnerved by doubts over China's weakening economy and U.S. oil prices that have plummeted nearly 30 percent since the year began, sending the Dow Jones Industrial Average plunging more than 500 points early Wednesday.

But the panicked selloff turned to rally in the afternoon, as the Dow recovered to close at 15,766.74, a loss of 249.28 points, or about 1 percent. The Standard & Poor's 500 index slipped 22 points, or 1 percent, to 1,859.33, and the tech-heavy Nasdaq Composite ended at 4,471.69, down 5.26 points.

The worldwide rout extended a devastating trading streak that has marked the worst start to a year in market history, with the three major U.S. indexes each falling more than 10 percent in the past three weeks.

The panicked selloff touched every corner of American industry, most notably energy, raw materials, finance and retail. All 500 companies in the S&P index hit yearly lows.

Economists pushed to cool down the heated selloff by pointing to more optimistic fundamentals, including the nation's strengthening employment rate and the industry boost of cheaper fuel costs.

"The selloff is simply happening too fast, which signals panic selling more than reasoned investment decisions. … It can't last," said Chris Rupkey, chief financial analyst at MUFG Union Bank. "This is overdone, and overdone, hard-down market selloffs don't hold."

Although he acknowledged that many had "fears of a full-scale recession," Chris Hyzy, a chief investment officer at Bank of America Merrill Lynch, wrote Wednesday in a note to investors that "the 80-month-long economic expansion is still alive."

An increasingly sluggish China has touched off fears of a hard landing for the world's second-largest economy, which could ripple outward and harm the many companies that rely on its exports and spending for business.

Global markets took a beating Wednesday. Europe's Stoxx 600 index tumbled more than 3 percent, while shares in Hong Kong dove sharply to three-year lows.

Japan's Nikkei Stock Average slid more than 3 percent and entered what analysts call a bear market, having collapsed 20 percent from recent highs.