A strong rally on Wall Street evaporated on Tuesday and stocks ended with deep losses as concerns about China’s economy outweighed lower valuations that some saw earlier as bargains.
In a dramatic trading session, major indices turned negative in the final minutes of trading after previously climbing almost 3 percent.
Investors cited more worries that a slowdown in China could hobble global growth, even after the country’s central bank cut interest rates on Tuesday for the second time in two months. The move came after Chinese stocks slumped 8 percent on Tuesday, on top of an 8.5 percent drop on Monday.
“People are still nervous about overseas and what might happen tonight. Nobody wants to sit around and see what happens,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Tuesday’s drop followed steeper losses on Monday, when the Dow Jones industrial average fell more than 1,000 points at its lows and the S&P 500 recorded its worst day since 2011.
In the past week, the S&P has lost 11 percent.
“Investors are still concerned about exogenous growth and shifting Fed policy, and both of those are still on the table,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The Dow Jones industrial average fell 204.91 points, or 1.29 percent, to end at 15,666.44.