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06.01.2016 21:11 U.S. stocks closed

U.S. stocks tumbled to three-month lows, following equities around the world after China weakened its currency, stoking investor concern that a slowdown in the world's second-largest economy will damp global growth.

Energy and raw-material companies in the Standard & Poor's 500 Index led the selloff, losing at least 2.6 percent as China's move revived the angst that sent financial markets into turmoil last summer. Chevron Corp. declined 3.9 percent, while copper producer Freeport-McMoRan Inc. slid 8 percent. Six of the benchmark's 10 main industries dropped at least 1 percent.

The S&P 500 lost 1.3 percent to 1,990.40 at 4 p.m. in New York, trimming a drop of as much as 1.9 percent while sliding to its lowest level since Oct. 6.

China's central bank set the yuan's reference rate at an unexpectedly weak level, adding to anxiety about an economic slowdown that has dominated markets this week. The S&P 500 on Monday kicked off 2016 with its worst start in 15 years. Adding to geopolitical worries, North Korea claims it successfully tested its first hydrogen bomb, which follows a recent buildup of tension between Saudi Arabia and Iran.

Commodity producers fell amid speculation that weakness in China would weigh on demand for raw materials. Brent crude oil dropped below $35 a barrel to its lowest since 2004, while West Texas Intermediate futures lost more than 5 percent. Apache Corp. and Murphy Oil Corp. tumbled 11 percent to the steepest losses in seven years.

China's currency devaluation last August triggered a global rout that drove the S&P 500 to its first correction in four years, after it had reached an all-time high as recently as May. Now, UBS Group AG's technical strategists predict the U.S. benchmark will enter a bear market as early as this year.

Weak Beginning

The S&P 500 has fallen 2.6 percent in the first three days of the year. That's better than the 2.7 percent plunge to start 2015, which marked the worst opening since 2008. The index swung wildly last January before ending the month lower by 3.1 percent. The poor start to 2016 has left the benchmark index 6.6 percent below its all-time high set in May.

Sentiment has turned more cautious on stocks after the Federal Reserve's first interest-rate increase since 2006 and forecasts for little to no growth in corporate earnings until March. Fed officials have stressed that while the pace of future hikes will be gradual, it will depend on progress in economic data.

Equities offered little reaction to the Fed's latest meeting minutes, which showed some policy makers saw the decision to raise interest rates as a "close call." Minutes from the December gathering said "almost all" of the rate-setting committee's participants were satisfied the criteria for tighter policy had been met.

Data Wednesday showed companies added more workers than projected in December, indicating the job market had momentum as 2015 came to a close. A separate report showed service companies continued to outperform their manufacturing counterparts in December as orders and employment picked up. Other data said factory orders in November fell, in line with forecasts from economists surveyed by Bloomberg.



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