Keep the seatbelts on.
Stock markets around the world tumbled again Tuesday, dashing hopes that financial markets would calm down after two weeks of turbulence.
Investors appear to be growing more nervous about the strength of the global economy. China released a weak report on manufacturing Tuesday, and an influential international policymaker sounded a downbeat note on the outlook for Asian economies.
After steep declines in the stock markets of Asia and Europe, U.S. stocks also plummeted. The Standard & Poor’s 500 index fell to 1,913.85, down 2.96 percent. The benchmark is now nearly 10.2 percent off its all-time nominal high, putting it in a “correction,” the Wall Street name for such a decline.
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As the selling continued, some analysts said it might be a while before the markets recover.
“You rarely get a V-shaped bottom,” said John De Clue, chief investment officer for the private client reserve of U.S. Bank. “You usually bounce around for a while.”
The Dow Jones industrial average lost 469.68 points, or 2.84 percent, to end at 16,058.35, on Tuesday. The well-known market barometer is in a correction, having fallen more than 12 percent from its all-time nominal high, reached in May. The technology-heavy Nasdaq dropped nearly 3 percent on the day. European stocks fell nearly 3 percent, and China’s Shanghai index was down 1.23 percent.
Investors are looking forward to assess what might drive the market up or down.
Looming at the end of this week is the release of U.S. jobs numbers. If the government numbers Friday show that employment growth remains strong, investors may be encouraged that developments overseas will not harm the U.S. economy. But a robust jobs number may also prompt the Federal Reserve to raise interest rates later this month, rather than wait longer.
The prospect of a September rise in interest rates has worried many economists, not only because it could happen during volatile market conditions but also because they believe that deflation is still stalking the U.S. economy. In a speech in New York on Tuesday, Eric S. Rosengren, the president of the Federal Reserve Bank of Boston, highlighted that inflation numbers are well below the Fed’s target of 2 percent. Rosengren also suggested that a weaker global economy and turmoil in the markets might make reaching that level harder.
“The jobs numbers on Friday will be really important,” said Edward J. Perkin, chief equity investment officer at Eaton Vance Management. “It will determine Fed policy one way or another.” If the Fed decides to raise rates this month, it will likely announce it after monetary policy meetings scheduled for Sept. 16 and 17.
Even if the Fed does not opt for a September rate increase, further problems in China and elsewhere could make investors reluctant to jump back into the stock market.
On Tuesday, a report from Beijing showed that Chinese manufacturing activity slipped in August to a three-year low, with both current production and new orders falling. That added to fears that China’s economy, the world’s second largest after that of the United States, may be slowing more than analysts had believed.
Christine Lagarde, the managing director of the International Monetary Fund, warned on Tuesday that the world economy would most likely expand at only a “moderate” pace and would probably be weaker than the IMF forecast just two months ago.
“Asia as a region is still expected to lead global growth,” she said in a speech in Jakarta, Indonesia. “But even here, the pace is turning out slower than expected - with the risk that it may slow even further given the recent spike in global risk aversion and financial market volatility.”
The major European indexes all closed the day about 2 percent to 3 percent lower. In London, the FTSE 100 fell 3 percent, while the CAC 40 in Paris ended down 2.4 percent.
European shares declined despite an official report on Tuesday that showed that the jobless rate in the eurozone had slipped 0.2 of a percentage point in July, to 10.9 percent - the first time it sank below 11 percent since early 2012. While that still leaves about 17.5 million people classified as unemployed, it suggests that the bloc’s modest economic recovery remains on track.
The dollar fell against other major currencies, dropping 1 percent to 119.97 yen; the euro rose 0.9 percent to $1.1317 in late afternoon trading.
Oil prices fell, breaking a three-day streak of increases. Futures contracts for West Texas Intermediate crude fell 8 percent to $45.17 a barrel, while Brent futures contracts, the global standard, fell 9 percent to $49.31.