U.S. stocks tumbled to start 2016, as a rout in Chinese equities renewed concern that an economic slowdown there will damp global growth.
Investors returning to the market after the New Year holiday faced a worldwide selloff sparked by weak factory data in China, while a reading that showed the fastest contraction in U.S. manufacturing in six years bolstered anxiety that slowing growth in the world's second-largest economy is spreading. A flareup in tension between Saudi Arabia and Iran added to the unease.
The Standard & Poor's 500 Index fell 1.5 percent to 2,012.98 at 4 p.m. in New York, after sliding as much as 2.7 percent, for its worst start to a year since 2001.
Trading was halted in China after a 7 percent drop in the CSI 300 Index of large-capitalization companies listed in Shanghai and Shenzhen amid deteriorating manufacturing data. Chinese policy makers, who went to unprecedented lengths to prop up stock prices during a summer rout, are trying to prevent financial-market volatility from weighing on economy set to grow at its weakest annual pace since 1990.
S&P Dow Jones Indices data indicate the first day of trading has no predictive power for the rest of the year. The index ends the year in the same direction it takes on the opening day 50.6 percent of the time, the data show. The first month of the year has proved more telling -- the gauge's return in January determines its direction for the year 72.4 percent of the time.
After scaling new peaks and enduring its worst selloff in four years, the main U.S. equity index ended 2015 0.7 percent lower. Investor sentiment wavered last year between optimism that the economy was strong enough to handle higher borrowing costs and concern that China's slowdown will hurt global growth, which exacerbated weakness in commodity prices and raw-material stocks.
The beginning of 2015 was also rocky, with the benchmark index dropping 2.7 percent in its first three sessions, followed by a two-day, 3 percent rally before eventually finishing January down 3.1 percent.
Meanwhile, investment strategies premised on buying shares based on their momentum just posted the best year since 2007, which isn't great news for bulls. Past instances when momentum stocks -- defined as the ones showing the biggest gains in the last six to 12 months -- won have occurred closer to the end of rallies than the beginning, signaling indiscriminate buying at a time when more traditional share drivers such as earnings growth are starting to wane.