U.S. stocks dropped sharply on Thursday as concerns mount that China's economic struggles could soon have an impact on American companies.
All three major U.S. stock indexes (the S&P 500, the Dow Jones Industrial Average and the Nasdaq) fell at least 2.1%, marking the worst day for U.S. equities in a year and a half.
[seealso slug=http://sale-online.click/2015/07/27/shanghai-china-stock-market/%5D%3C/p%3E%3Cp%3EThe rout started in China, where the country's most-watched index (the Shanghai Composite) fell more than 3%, leading to declines in European and U.S. markets. Investors, facing screens full of red, retreated to their usual places of safety: bonds, gold and cash.
"The emerging markets really got slammed overnight and that quickly spread to the rest of the world," said J.J. Kinahan, chief strategist at TD Ameritrade.
Media and technology stocks experience some of the most significant losses including Walt Disney (down 6%), Netflix (down 7.8%) and Time Warner (down 5%) among the biggest losers.
Media stocks have a particularly rough time lately as investors have begun to worry that once-consistent business models like cable TV are beginning to decline. Combined with broader worries about the international economic situation, the current market has resulted in a tough month.
China's stock market woes have been going on for more than two months, when the Shanghai Composite index began to decline even more rapidly than it had been climbing. Analysts had warned that Chinese stock investment had become overrun with people who had purchased stocks with money that had been taken out as a loan. This kind of speculation is heavily scrutinized and often seen as a precursor to a significant decline. Few disagree that a bubble had formed.
The rapid fall in Chinese stocks had not yet had a material impact on the U.S., but many investors and analysts had been keeping a close eye on the situation. China's government has taken a variety of steps in an attempt to shore up its stock market, although they have had little success.
Now, this is some fear of a total meltdown in China's market.
#China’s newest Make-or-Break Level for stocks is Shanghai 3,500 pic.twitter.com/zPpDVSTUwE— Francine Lacqua (@flacqua) August 20, 2015
While U.S. economic indicators have been mostly positive lately, China's health is an important factor for many American companies. China remains among our biggest trading partners and is a major market for companies like Apple and YUM Brands, which stand to be hit by any slowdown.
Twitter was among the hardest hit tech stocks. The company's shares closed down 5.8% at $26, exactly its IPO price.
Twitter has been reeling for the past month as investors have questioned everything from its business foresight to the company's leadership. Co-founder Jack Dorsey is currently serving as interim CEO, having replaced Dick Costolo at the top job in July.
The Associated Press contributed reporting to this story.