Stocks plunge in flight to safety, Dow drops most since June

|By:, SA News Editor

The Dow and S&P suffered their biggest one-day point drops since June in an extension of yesterday's selling amid continued China-related worries.

The Dow fell 318 points (-2%) in its worst weekly performance since May 2012, the S&P tumbled 2% to finish below 1800, and the Nasdaq (-2.2%) fared the worst of the big three indexes; the Russell 2000, which earlier this week hit a new record high, sank 2.4%, and the Dow Transports fell more than 4%.

In addition, weakness in emerging markets and their currencies has increased fears of a potential currency crisis while continued yen strength has posed a headwind to carry trades, which supported much of last year's rally in global equities.

The selling stirred up interest in volatility protection, sending the VIX to its biggest one-day pop since April.

Buying in Treasurys sent the benchmark 10-year note's yield to a two-month low of 2.704%; gold inched up $2 (+0.2%) to settle at $1,264.30.

With the Fed’s first policy meeting of the year scheduled for next week, the question being asked is whether jittery markets will prompt the central bank to postpone the taper.