(MoneyWatch) After Wall Street's pause on Friday from last week's dramatic selloff, the plunge resumed this morning.
The losses extended across equities, bonds and commodities. Worries over the Federal Reserve's suggestion that it would begin cutting back on some of its monetary stimulus operations were blamed in part, along with news that the People's Bank of China was cracking down on its own banking system's off-balance sheet lending.
Fears and rumors in China that the central government had lost control of the banking system and would resort to a draconian crackdown on its shadow loan market prompted Monday's selloff.
In late morning trading, the Dow industrials were down 244 points to 14,558. The S&P 500 fell 30 to 1,561, while the Nasdaq composite index lost 56 to 3,300.
Big banks were among the worst losers: JPMorgan Chase shed more than 2 percent to $50.78, Wells Fargo was down 2.25 percent to $40 a share, Citigroup was falling 2.7 percent to $45.60, Morgan Stanley lost more than 2.5 percent to 24.29. Fears about the banks include exposure to China, removal of Fed stimulus, and falling equity prices affecting their own portfolios and balance sheets.
Among tech stocks, Apple was down $15 a share to 398.40, a loss of 3.6%.
In the bond market, the yield on the 10-year Treasury bill rose to 2.61 percent, a more than 100 basis-point surge over the last several days. The rise began after comments last week by Fed Chairman Ben Bernanke that it may begin cutting back on its bond buying, assuming the economy continues to improve. Many economists and investors believe economic conditions haven't improved so much that the Fed should take its foot off the gas pedal.
In China, the Shanghai composite index shed 5 percent, while Hong Kong's Hang Seng index lost more than 2 percent. In Europe, Britain's FTSE 100 and France's CAC-40 both slid more than 1 percent, and Germany's DAX was down just under 1 percent.
The rise in U.S. rates began after comments from the Federal Reserve last week that said the Fed's bond-buying program could wrap up next year as long as economic conditions continue to improve. The Fed's easy-money policies have made borrowing cheaper and boosted corporate balance sheets.
Investors have worried that higher U.S. interest rates will hurt homebuilding companies if steeper mortgage rates make it harder for people to buy homes. PulteGroup slumped 67 cents, or 3.6 percent, to $18.13.
Banks had some of the biggest losses in early trading. Financial stocks in the S&P 500 index fell 2.1 percent.
Other stocks with big moves included:
- Tenet Healthcare rose $2.55, or almost 9 percent, to $45 after offering to buy Vanguard Health Systems Inc. for $1.8 billion. The offer of $21 per share pushed Vanguard stock up $8.09, or 64 percent, to $20.62.
- Facebook fell 82 cents, or 3.3 percent, to $23.71. Monday was the first full trading day after Facebook acknowledged it had accidentally exposed contact information for 6 million users to some other users.
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