A global stock selloff sparked by world growth concerns showed no signs of relenting, sending U.S. stocks toward the worst week since 2011.
The Standard & Poor’s 500 Index fell again after its steepest one-day decline since February 2014. The benchmark gauge is down more than 6 percent from its last record in May, after dropping below a trading range that has supported it for most of the year.
The S&P 500 lost 1.8 percent to 1,999.6 at 11:50 a.m. in New York and is down 4.4 percent this week, dipping below the 2,000 level for the first time since February. The Nasdaq 100 Index slumped 2.3 percent to extend its biggest two-day drop since 2011. The Russell 2000 Index of smaller companies sank 1.3 percent, extending its drop from a June record to more than 10 percent. The VIX, the benchmark gauge of U.S. equity options, was poised for its biggest weekly gain on record amid demand for contracts to protect against further losses.
“Yesterday was a decimation in the market,” said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. “You typically tend to have a follow-through after big days. Given we broke below just about all key short-term technical levels, it isn’t surprising to see us down again today.”
U.S. equities followed overseas markets lower, as the Stoxx Europe 600 Index tumbling 2.4 percent and the MSCI All-Country World Index slid 1.6 percent.
More than $500 billion was erased Thursday as investors targeted the year’s biggest winners such as Netflix. The S&P 500 is down 4 percent for the week, poised for its worst showing since 2012. Groups from biotechs to energy companies are in a correction, down more than 10 percent from their highs, while chip stocks have tumbled 20 percent from a peak, meeting the definition of a bear market.

China Manufacturing

Equities continued to slide today after China released its weakest manufacturing data since the global financial crisis, which accelerated losses in riskier assets. Worries about the world economy had already been intensifying after China devalued its currency last week, compounded by uncertainty about what Federal Reserve inflation concerns portend for interest rates.
“This market won’t have legs until we have further clarity on the Chinese currency and U.S. rates -- right now we have neither,” said Michael Ingram, a market strategist at BGC Partners in London. “Even then, the dependent question mark over growth will linger. Investors are scared and confused, and if you are an emerging market equity investor, probably close to suicidal.”

Trading Range

Before this week, U.S. equities had held their ground throughout 2015, weathering turmoil from Greece and headwinds including a strong dollar that threatened multinationals’ earnings and a more than 60 percent drop in oil prices.
The S&P 500 stuck within a range roughly tracking its 50-, 100- and 200-day moving averages, boosted by signs the economy is recovering and support from central banks. The benchmark index hadn’t had a decline of more than 5 percent all year, and hasn’t dropped more than 10 percent since 2011.
Amid the selloff, the S&P 500 is still trading at 17.9 times earnings. That’s down from 18.9 times a month ago, which was near a five-year high, but still exceeds the five-year historical average of 16.1 times profit.
Data in the U.S. today showed an August factory employment gauge dropped to a one-year low. Investors are watching economic data for clues on when the Fed will raise interest rates.
Slower global growth may cause the Fed to delay its first rate increase since 2006. Minutes of the central bank’s latest meeting, released earlier this week, showed officials are concerned about stubbornly low inflation even as the job market improves. Traders are now pricing in a 34 percent probability of a rate move at the September meeting, down from 50 percent before the release of the minutes.

VIX Surges

The Chicago Board Options Exchange Volatility Index surged 28 percent to 24.49. The measure has rallied 80 percent this week, which would mark its biggest five-day gain since June 2012.
The Chicago Board Options Exchange Volatility Index surged 20 percent to 23.02. The measure has rallied 90 percent this week, the biggest gain since it was created in 1990.
Investors are selling the biggest winners of 2015. Companies that have come to be known as the Fab Five -- Netflix Inc., Facebook Inc., Amazon.com Inc., Google Inc. and Apple Inc.-- have seen $97 billion in market value erased over two days. Losses have pushed the Nasdaq 100 Index down 5 percent, the biggest decline for that period in almost four years.

Broad Retreat

All 10 major groups in the S&P 500 retreated. Technology companies dropped 2.1 percent, while energy and consumer discretionary shares slid more than 2 percent.
Intuit Inc. was the biggest decliner in the benchmark gauge, plunging as much as 17 percent, the most since March 2003. The company, which makes Quicken home-accounting software, fell after providing annual forecasts for sales and earnings that trailed analysts’ estimates.
Facebook Inc. and Apple Inc. were also among the biggest drags in the technology sector, losing more than 3.4 percent. Skyworks Solutions Inc. slid 2.7 percent as the Philadelphia Semiconductor Index fell into a bear market, having plummeted 21 percent from a 15-year high reached in June.
Ross Stores Inc. decreased 7.8 percent after reporting quarterly earnings after providing earnings guidance that fell short of analyst expectations. The company’s stock has slipped 9.6 percent over the past three trading sessions.
Valero Energy Corp. and Marathon Petroleum Corp. were the biggest losers in the S&P 500’s energy sector, in which 36 out of 40 stocks fell. Tesoro Corp. and Halliburton Co. declined more than 5 percent.