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.
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.