Dow Closes Nearly 600 Points Down After Midday Rally Fizzles

NEW YORK (CBSNewYork/AP) --  The Dow Jones industrial average was down nearly 600 points at closing Monday, after beginning the day tumbling more than 1,000 points minutes after the market opened in a wave of selling that circled the globe after a historic plunge in Chinese stocks.

As CBS2's Matt Kozar reported, the closing bell on Monday marked the end of an anxiety-filled day at the New York Stock Exchange, where some traders took smoke breaks early and often.

"I've never seen the Dow down a thousand points in one move," Ben Willis of Princeton Securities said on the CBS Evening News. "That's an extraordinary thing to watch happen."

After plummeting 1,089 points Monday morning, the Dow rebounded – but not nearly enough to erase the day's losses.

The Dow was down 588.47 points, or 3.58 percent, to 15,871.28 at closing time.

The Standard & Poor's 500 index slid 77.68 points, or 3.9 percent, to 1,893.21, while the Nasdaq composite shed 179.79 points, or 3.8 percent, to 4,526.25 points.

U.S. Stock indices were more than 2 percent lower on Monday afternoon but were off the day's worst levels after a dramatic turnaround in shares of Apple helped boost sentiment. The precipitous drop at the open sent a shiver of fear through Americans with retirement accounts or saving to buy a home that the bull market is over.

MORE: CBS News MoneyWatch | PHOTOS: Dow Falls 1,000 Points

"For me, it felt like the crash of '87," said Peter Tuchman of Quattro Securities.

The Standard & Poor's 500 index slid into correction territory after the opening, Wall Street jargon for a drop of 10 percent or more from a recent peak. The last market correction was four years ago. Treasuries surged as investors bought less risky assets.

The Dow, S&P and Nasdaq are all down for the year.

Heightened concern about a slowdown in China had already shaken markets around the world on Friday, driving the U.S. stock market sharply lower. The rout in U.S. equities followed an 8.5 percent decline in Chinese markets.

"China is the place that we buy our stuff from, and they buy; they have lots stuff from us. And China is a big, big deal," said Crain's New York senior reporter Aaron Elstein. "Between the U.S., Europe and China, those are the three economies that matter the most all over the world."

The decline in China, in turn, sparked a global selloff in stocks, oil and other commodities. The price of oil was down to about $38 per barrel.

It will lead to relief at the gas pump, but that doesn't mean it's good news.

"It also means that, well, the economy's not so good, because there's not so much demand for oil," he said. "So that's bad news today. Some days that's good news. But today, the price of oil being down is bad news."

And it has left investors unsure of how to gauge which companies might be a good bet to weather a slowdown in China.

"This all starts is with the stock bubble in China, and when you have a stock market that is up 160 percent in two years, from June 2013 to June 2015, which is a 60 percent annual rate of growth, that's a bubble," Hugh Johnson, chairman of Hugh Johnson Advisors, told CBS MoneyWatch. "When you unwind a bubble, it doesn't stop at 30 percent, or even 35 percent, especially those investors are highly leveraged -- these are Chinese investors, 90 million of them -- that is precisely what is going on, and it doesn't stop at 35 percent."

China's main index sank amid fears over the health of the world's second-largest economy.

For Michael Cantwell, who works in the mail room at a law firm and has a 401(k), the market gyration elicited a shrug of the shoulders.

"What are you going to do?" he told WCBS 880's Peter Haskell outside the New York Stock Exchange. "There's really nothing you can do, right?"

Mark Fisher, who works in finance, said the money pros see it differently.

"It's a buying opportunity, not a time to get out of the market," he said.

Elstein advised against panicking or touching your 401(k).

"You're not going to make any smart decisions right now when the market's having a fit like this, so just wait a while," he said. "And if days like this really make you unhappy; if you really can't sleep at night, then you have to decide if you really want to be in the stock market."

CBS News Business Expert Jill Schlesinger also warned against hasty behavior. When asked what people should do with their 401(k)s, she told Dick Brennan: "How about nothing? How about sitting tight and sticking to your game plan."

Schlesinger said diversified investors probably weathered today pretty well.

"The reality is when you decide to make a knee-jerk decision -- selling at the bottom, jumping in at the top -- you usually regret it," Schlesinger said. "I'd hate to see people look back and say: 'Gosh, why did I get out again? Hey, I had 20, 30 more years to go; I needed that money."

Experts also said there is no reason to avoid major purchases or worry about personal financial calamity.

"Nothing about what's happened in the stock market should really affect an individual's spending decisions, unless, in fact, their earning power has gone down, said Michael Santoli of Yahoo Finance. "Right now, interestingly, this is not mostly about what's happening in the U.S. economy. The U.S. job picture still looks relatively strong. Consumer spending has held up rather well. The housing market has actually come back a little bit."

Indeed, consumers on the proverbial Main Street have gone on spending, and the unemployment rate has held steady at 5.3 percent. Elstein said with interest rates at historic lows, experts said it might even be a good time to borrow.

"Everyone thinks the Federal Reserve is going to raise interest rates in a couple weeks, but if the economy's slowing down, maybe they won't," Elstein said.

Schlesinger said investors should buckle up, because it is likely the bumpy ride will continue

But some investors could not help but be worried.

"One third of my retirement is dependent on the stock market," said investor Carol Sandvik.

Sandvik is relying on her investments for income.

"This is, some ways, a natural thing to happen and a good thing to happen, so I'm trying to trust it. But it still makes me nervous," she said.

Jay Osminski and his wife said the market drop will not affect their spending, because he already knows it is discretionary income they are contributing. Still, they were concerned about their 401(k)s.

"I'm very uneasy because I've already lost a couple times, you know -- other dips in the stock market," he said.

Meanwhile, oil prices, commodities and the currencies of many developing countries also tumbled on concerns that a sharp slowdown in China might hurt economic growth around the globe.

The market slide was broad. All the sectors in the S&P 500 headed lower, with energy stocks notching the biggest decline, 3.1 percent.

In Europe, Germany's DAX fell 5 percent, while the CAC-40 in France slid 5.6 percent. The FTSE 100 index of leading British shares dropped 4.5 percent.

The Shanghai index suffered its biggest percentage decline since February 2007, with many China-listed companies hitting their 10 percent downside limits. The benchmark has lost all of its gains for 2015, though it is still more than 40 percent above its level a year ago.

Underlying the gloom in China is the growing conviction that policymakers and regulators may lack the means to stem the losses in that nation. The country is facing a slowdown in economic growth, the banking system is short of cash and investors are pulling money out of the country, experts note.

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

China's dimming outlook is drawing calls for more economic stimulus from Beijing, though earlier government efforts to stop the sell-off in stocks appear to have done little to stabilize markets.

The bloodletting spread across Asia earlier, where Japan's Nikkei fell 4.6 percent, its worst one-day drop since in over two and a half years. Hong Kong's Hang Seng index fell 5.2 percent, Australia's S&P ASX/200 slid 4.1 percent and South Korea's Kospi lost 2.5 percent.

Those declines followed tumbles over the weekend in emerging markets such as Egypt, Dubai and Saudi Arabia.

The panic has underscored the scale of the challenge for Chinese leaders in seeking to curb excess investment and guide the economy toward a more sustainable pace of growth.

"My biggest concern is that global growth momentum is very fragile. The most important step is to see China take further action to try to bring their economy to a 7 percent growth path,'' said Rajiv Biswas, Asia-Pacific chief economist for IHS.

But John Manley, Chief Equities Strategist at Wells Fargo said he does not believe this will turn into a recession.

"I really don't see anything in the numbers here in the United States that indicate we're going into a recession," he told 1010 WINS. "Now maybe I'm being just a stick in the mud, but I think that what happens is people get fearful and in theory, you should be buying fear and selling enthusiasm and you know which one is going on today."

In currency trading, the dollar was at 118.55 yen on Monday, down from 122.05 yen on Friday. The euro rose to $1.1579 from $1.1138. Currencies fell hard in developing economies, particularly those that rely heavily on the export of commodities and oil, both of which China is a big consumer.

In commodity markets, benchmark U.S. crude dropped $1.99 to $38.46 a barrel in New York. It fell 87 cents a barrel on Friday. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $2.50 to $42.96 a barrel.

U.S. government bond prices rose. The yield on the 10-year Treasury note fell to 2.03 percent.

(TM and © Copyright 2015 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2015 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)