MONEY 401(k)s

This Is the Single Biggest Threat to Boomers’ Retirement Savings

Roulette Wheel with ball on "0"
Alexander Kozachok—Getty Images

401(k) balances for longtime savers soared to $250,000, but many are taking big risks in the stock market.

IRA and 401(k) balances are holding steady near record levels. But certain risks have been creeping into the typical plan portfolio, which after a long bull market may be overexposed to stocks and otherwise burdened by a rising loan balance, new research shows.

The average balance in both IRA and 401(k) accounts dipped slightly in the second quarter, but continues to hover above $91,000 for the past year, according to new data from Fidelity Investments. Savers who have participated in a 401(k) for at least 10 years, and those who have both an IRA and a 401(k), now have balances that top $250,000.

Much of this growth owes to the stock market, which has more than doubled since the recession. But individual savers are stepping up as well. For the first time, the average 401(k) participant socked away more than $10,000 (including company match) in a 12-month period, Fidelity found. That occurred in the second quarter, when the total contribution rose to $10,180, up from $9,840 the previous quarter.

Yet bulging savings have tempted some workers to dig a little deeper into the 401(k) piggy bank. New plan loans and participants with a loan outstanding held constant in the second quarter, at 10.1% and 21.9% respectively. But the average outstanding plan loan balance climbed to $9,720, compared to $9,500 a year earlier. This leaves borrowers at greater risk of losing tax-advantaged savings and growth.

Plan loans are a primary source of retirement account leakage—money that “leaks” out of savings and never gets replaced. This may occur when a worker switches jobs and cannot repay the loan, which becomes an early distribution and may be subject to taxes and penalties.

Meanwhile, savers who are not invested in a target-date fund or managed account, and who have not rebalanced to maintain their target allocation, may find that the brisk rise in stock prices has left them with too much exposure to stocks. Baby boomers especially are at risk, Fidelity found. Pre-retirees should be lightening up on stocks, while adding bonds to reduce risk. But unless they regularly rebalance—and few people do—boomers have been riding the recent market gains, so they are holding an ever larger allocation in stocks than they originally intended.

That inertia could hurt boomers just as they move into retirement. During the last recession, 27% of those ages 56 to 65 had 90% or more of their 401(k) assets in stocks, which fell some 50% from the market peak in 2007. Those kinds of losses could wreck a retirement.

Could this scenario repeat? Very possibly. Nearly one in five of those ages 50-54 had a stock allocation at least 10 percentage points or higher than recommended, Fidelity found. For those ages 55-59, some 27% of savers exceed the recommended equity allocation. One in 10 in both age groups are 100% invested in stocks in their 401(k). It’s possible that these investors are holding a significant stake in safe assets, such as bonds or cash, outside their plans, which would cushion their risk. But that often is not the case.

Whether you’re approaching retirement, or you’re just starting out, it’s crucial to hold the right allocation in your 401(k) plan. Younger investors, who have decades of investing ahead, can ride out market downturn, so a 80% or higher allocation to stocks may be fine. But a 60-year-old would do better to keep only 50% invested equities, with the rest in a mix of bonds, real estate, cash and other alternatives. To get a suggested portfolio mix, try this asset allocation tool. And for tips on how to change your portfolio as you age, click here.

Read next: Americans Left $24 Billion in Retirement Money on the Table Last Year

MONEY Savings

This Is The Biggest Threat to Your Retirement Number

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Image Source—Getty Images

The one thing that can suddenly derail your retirement strategy altogether.

The idea of coming up with an exact number for how much you need to save for retirement is an attractive one for savers. By drawing a visible finish line for your retirement savings, a retirement number can be the foundation of your financial planning throughout your career.

In coming up with a good estimate for a retirement number, it’s crucial to understand how having a bad market in early retirement can have a huge impact on the viability of your entire long-term retirement strategy. If you don’t take this risk into account, it could pose a threat to the accuracy of the retirement number you’ve spent a lifetime seeking to reach.

How a bad market early in retirement can snare you
In coming up with a viable retirement number, the ideal situation is one in which you can weather the worst future conditions the financial markets can throw at you. Much of the time, planning for the worst will leave you in far better shape than you expected, as worst-case scenarios don’t occur very often. Yet if you truly want a retirement number that maximizes the probability that your money will outlast you, you can’t afford to ignore realistic future scenarios, no matter how improbable they might be.

In doing research on the retirement-number question, many experts have noticed that the most difficult situations retirees face occur when a major market correction occurs soon after a person retires. Even when overall average annual returns over the long run are similar, a retiree who suffers poor performance early in retirement has a much harder time preserving his assets than one who’s fortunate enough to avoid bad markets until later on. Indeed, in some cases, even a retiree who has ahigher average annual return in retirement still ends up worse off if the worst years come early on.

Experts call this problem sequence-of-return risk, and the problem stems from the fact that retirees need to take withdrawals from their savings in order to cover their living expenses in retirement. In simplest terms, bad performance early in retirement forces you to “sell low” by liquidating investments at fire-sale prices to cover your required withdrawals. If poor initial returns last long enough, then you won’t have enough money to enjoy the full benefit of any future rebound in the financial markets.

2 ways to protect against this retirement-number risk
In response to sequence-of-returns risk, financial analysts have come up with conservative rules of thumb such as the well-known 4% rule to help savers build more secure retirement nest eggs. Using historical data that suggests a typical balanced portfolio with stocks and bonds can make it through tough market conditions for a 30-year period as long as you start out taking no more than 4% of your initial portfolio value, coming up with a retirement number is simple: Just multiply your expected annual income needs in retirement by 25.

However, there are several problems with that approach. First, many people have a hard time saving 25 times their expected net spending in retirement. Also, some believe the 4% rule could be problematic in a low-interest rate environment, because low initial bond yields leave the income-generating side of the portfolio weaker than usual.

An alternative approach uses a different way of thinking about retirement. The benefit of the 4% rule is that it aims to provide exact expectations for what you can safely spend. Yet in reality, most retirees aren’t terribly comfortable continuing to spend at heightened levels when the markets move against them, and they instead look at ways to economize and spend less. Adapting the 4% rule to allow for reductions in withdrawals during lean return years is an idea that has been floating around for years, and research suggests that if a retiree can handle volatile markets by cutting spending, it can reduce the needed multiple of annual expenses from 25 down to 20 or lower.

Stay safe
With markets at high levels now, those who have recently retired are understandably nervous about the potential fallout from sequence-of-returns risk. Your best defense against this risk is to find ways to be more flexible with your financial needs. If you can build in some resiliency to changing future conditions, you’ll be much more likely to aim at a retirement number that will get the job done.

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TIME Amazon

Why Amazon’s Stock Is Suddenly Up 20%

Amazon Holds News Conference
David McNew—Getty Images Amazon CEO Jeff Bezos holds up the new Kindle Fire HD reading device in two sizes during a press conference on September 6, 2012 in Santa Monica, California.

Investors are cheering the firm's surprise second-quarter profit

Shares of Amazon were up some 20% Friday morning, adding more than $44 billion to the company’s market value, after strong growth in the company’s cloud business drove a surprise quarterly profit.

The Internet retailer’s stock price rose strongly overnight, after the firm announced a surprise profit of $92 million on Thursday afternoon, when analysts expected it would lose money in the second quarter.

Shares hit $563 per share as of 4:30 p.m. ET Thursday. The surge continued overnight, with the stock touching new highs of $570 per share as of 7:15 a.m. ET Friday morning, and were lately moving higher, according to Bloomberg News.

“They are showing investors that if they want to deliver profits, they can,” Michael Pachter, an analyst at Wedbush Securities, told Bloomberg. “Amazon is a dominant online retailer, well on its way to becoming one of the world’s largest retailers.”

The jump in shares — setting up the stock for its best trading day in five years — takes Amazon’s market capitalization to about $270 billion, overtaking that of retail giant Wal-Mart, Reuters reported.

It also added around $8 billion in paper value to CEO Jeff Bezos’ stake in the company.

Revenue from Amazon’s cloud operations — called Amazon Web Services — nearly doubled in the second quarter, indicating that the business was poised to drive sustainable earnings for the online retailer, Wall Street analysts told Reuters.

TIME China

China’s Economic Growth Remains Steady at 7%

Investors look at computer screens in front of an electronic board showing stock information at a brokerage house in Shanghai
Aly Song — Reuters Investors look at computer screens in front of an electronic board showing stock information at a brokerage house in Shanghai on July 14, 2015

The ruling party is trying to steer China to slower, more sustainable growth

BEIJING (AP) — China’s economic growth in the latest quarter held steady at 7 percent, its lowest level since the global crisis, but retail sales and factory output in June improved.

The figure reported Wednesday was slightly above forecasts and came as the ruling Communist Party is struggling to reverse a stock market plunge that threatens to disrupt its economic reform plans.

The ruling party is trying to steer China to slower, more sustainable growth based on domestic consumption instead of trade and investment. But an unexpectedly sharp downturn over the past two years raised the threat of politically dangerous job losses.

Beijing responded by cutting interest rates four times since November and pumping money into the economy through higher spending on construction of public works.

“The foundation for the stabilization of China’s economy needs to be consolidated,” said a spokesman for the National Bureau of Statistics, Sheng Laiyun, at a news conference.

Growth in retail sales and factory output declined for much of the quarter but showed a modest improvement in June. That suggested Beijing’s efforts to put a floor under the decline in growth might finally be gaining traction.

Retail sales rose 10.6 percent in June over a year earlier, 0.5 percentage points better than May’s growth. Also in June, factory output rose 6.8 percent, an improvement of just under 1 percent from the previous month.

TIME Economics

Trading Halt? Here’s What to Really Worry About in the Markets Now

A lot of unhappy accidents are occurring simultaneously

In markets, as in journalism, three’s a trend. So it’s no wonder that everyone is in a panic about the halt of today’s trading on the NYSE, coupled with the free fall in Chinese markets that has come on the heels of the Greek debt crisis. While the first is apparently a technical glitch, and the latter two are big, long-awaited macro events, the fact that they are all coming together isn’t great timing. Global markets were already on a hair-trigger.

Technical “glitches” are never welcome, but this one is coming at a particularly bad time. Markets have been waiting for a major correction for months now. Why? Because we’re now entering the second major global economic shift since the 2008 financial crisis–the end of the era of easy money. Central bankers have pumped trillions into the economic apparatus and kept interest rates low for an unprecedented period. The expectation until quite recently was that the Fed would slowly begin to raise rates in September, with the hopes of very gently deflating a market bubble that might otherwise pop (valuations of stocks are historically high).

MORE: Here’s What It Looks Like When the New York Stock Exchange Goes Down

But that was before the Greek crisis blew up, and threatened the future of the Eurozone and the political integrity of America’s biggest ally. And then there’s the market meltdown in China, which if it continues will make Greece look like a sideshow. China creates a new Greece every six weeks, and represents the biggest chunk of global growth in the last decade. TIME called the China bubble early on, but the fact that the markets have gone into a panicked slide now, as Europe is struggling and the US is about to change the economic paradigm by raising interest rates, isn’t a stellar combination.

(BTW, China’s crash is due to both market speculation—there are 90 million retail investors in China, two-thirds of which don’t have a high school diploma—and the real economy—debt is a whopping 300% of GDP. For all you need to know on that, check out Ruchir Sharma’s oped in today’s Wall Street Journal.)

What’s the upshot? Whatever correction is coming, US stocks are still a decent place to put our money relative to other regions at the moment. But investors have to take the long view and be prepared for a rough ride. Volatility in the first half of this year has already been greater than all of last year. I predict that when trading resumes on the NYSE, there will be jitters. And then people will go back to worrying about all the really important things in the global economy that they were worried about before the exchange halt.

TIME stocks

Why China’s Stock Market Meltdown Could Hurt Us All

The negative consequences are already spreading beyond China's borders

The great Chinese stock bubble of 2015 has, as many expected it would, popped. After peaking on June 12, the Shanghai Composite Index has fallen 32% and the more volatile, tech-oriented Shenzhen Composite Index has dropped 40%.

For the first three weeks after those markets peaked, Chinese stocks listed in the relatively stable US exchanges were largely unaffected. Many of them declined a bit, but for the most part investors accepted they were insulated from the margin trading, absurd valuations and speculative trading afflicting stocks in Shanghai and Shenzhen.

That has changed quickly this week. NetEase, a Chinese gaming company traded in New York, has lost 10% of its value in the past two days. Sina has fallen 15% while its peers in the online-media industry have slipped further: Yoku down 19%, Sohu and Weibo both down 20%, Changyou, another gaming company, is down 25%.

There are a couple of exceptions. E-commerce titan Alibaba is down 3% in the past two days, while Internet giant Baidu is down 5%. Both of those stocks are widely held and considered the blue chips of Chinese companies traded on US exchanges.

Few of these stocks saw the huge surges in share prices over the past year that their cousins on Chinese exchanges did, in which many recent tech IPOs tripled or more in value thanks to speculation and margin debt. Loans to individual investors may have risen as high as $1 trillion earlier this month. NYSE margin debt, by contrast, is around $500 billion.

When stock prices collapse, they prompt margin calls that require investors to either put up more money against the loans or sell the stocks, which only accelerates the selloff. But if investors in the US aren’t getting margin calls, why are the shares of Chinese companies traded on the NYSE and Nasdaq suddenly diving?

There are two key reasons. The first is that the declines on the Chinese exchanges have gone from a simple correction to a full-fledged selloff and now seems to be on the verge of something much more perilous: an all-out market panic.

That scenario seems likelier after the Shenzhen Composite fell another 2.5% Wednesday and the Shanghai Composite fell 5.9%. But those figures don’t tell the full story, because more than 1,300 companies have halted trading in their shares to prevent declines – including 32% of listings in Shanghai and 55% in Shenzhen. In total, 40% of the market cap on those exchanges can’t be bought or sold right now.

The second thing that changed this week is that it became apparent that the Chinese government, with its formidable ability to control many aspects of its economy, has met its match in the stock market. China recently cut interest rates, prevented any new IPOs and arranged $19 billion in purchases from fund managers, moves that only slowed the selloff temporarily.

On Wednesday, China’s central bank vowed to provide liquidity to help a state-backed margin finance company try to stabilize the market, once again to no immediate benefit. China’s efforts to stem the panic selling may end up like the Japanese government’s campaign to shore up stocks in Tokyo when that market collapsed in the early 1990s. Then, government money was spent only to slow an inevitable decline, as well as its recovery.

For Chinese companies, this is bad news because it threatens to stall consumer spending. As China’s growth has slowed, the government has tried to shift the economy away from a reliance on infrastructure and housing toward consumer spending. Many of China’s Internet companies listed in the US rely heavily on consumer engagement with e-commerce, games and ad-supported content.

The decline in US-traded stocks coincides with the spread of the selloff from mainland stock exchanges to the Hong Kong market. The Hang Seng Index fell 5.8% Wednesday and is now down 10% for the week. Tech stalwarts traded there are falling even further: Internet-media giant Tencent is down 14% this week and computer-manufacturer Lenovo is down 12%.

There is a broader concern here: The emergence of a stock bubble on Shenzhen and Shanghai exchanges occurred inside China’s borders. The popping of the bubble did too – until this week. It’s not just Hong Kong stocks and shares of Chinese companies traded in the US, the selloff is spreading for now to markets in countries that do a lot of business with China. Japan’s Nikkei 225, for example, was down 3.1%, dropping below 20,000 for the first time in nearly a month.

If the selloff in China does turn into a panic-driven meltdown, it could be bad news for US companies that have come to rely on the growing Chinese market for sales. GM said Tuesday its China auto sales were flat in June, even after it slashed prices 20% on dozens of models. Apple’s fortunes have revived recently on the success of its iPhones in China. The effect of the selloff on those sales last month may become apparent when the company reports earnings later this month.

Until now, the rise and fall of the Chinese stock bubble this year has been a fascinating spectacle to many in the US. And it remain that if the government does shore up the market or if the sense of panic dissipates. If not, the turmoil could end up slowing down China’s economy even further, and that could also become a drag for many US companies in this globally interconnected era.

TIME China

China’s Tanking Stock Market Plunges Even Further

Beijing's intervention has not arrested a precipitous slide

In China, red is a lucky color. So instead of the normal crimson, the nation’s stock market uses green to denote shares that are down. As the Shanghai and Shenzhen indexes opened for trading on July 8, a forest of neon green settled across electronic stock boards nationwide. At one point, shares on the benchmark Shanghai Composite index had dropped 8.2%, before ending the day down 5.9%.

Wednesday’s rout, just the latest in a weeks-long collapse of a once frothy stock market, came even after around half of listings on the Shanghai and Shenzhen exchanges had suspended trading. If these companies hadn’t voluntarily sidelined themselves or been forced to do so by regulators, the drop-off would no doubt be more precipitous.

The latest tumult in the world’s second largest stock market comes despite Beijing unveiling an unprecedented array of incentives to coax shares back on a positive track. Since mid-June, more than $3 trillion in share value has evaporated. On Monday, China’s state media had vowed that a government action plan, including a forced pause in initial public offerings and a scheme by which top brokerages would spend nearly $20 billion to shore up the market, would reverse “fragile market sentiment.” Beijing’s unprecedented intervention dwarfed even the U.S. government’s TARP financial rescue plan. But by Wednesday, the nation’s security regulator was warning of “panic” by spooked investors. Beijing’s involvement didn’t seem to be working.

The percentage of total Chinese wealth tied up in the stock market is still relatively small. And even if Chinese bourses have lost around 30% of their value since mid-June, they’re still higher than a year ago. Nevertheless, confidence has taken a drubbing. For massive state-owned enterprises, the bourses had proven useful to offload debt. For tens of millions of ordinary Chinese, particularly retirees without enough savings to buy property, playing the stock market allowed them to augment meager state pensions that cannot keep up with today’s living costs. Many people borrowed money to invest in shares, magnifying the losses. Unlike in many other stock markets, the Chinese exchanges primarily attract amateur individual punters, not larger investors.

For one such punter, a 24-year-old state-owned bank employee from Nanjing who goes by the English name of Ted, 2015 has proved calamitous. He began investing in January, putting around 1 million yuan (roughly $160,000) in the market. Now he has less than $100,000 left and pulled out of the market completely on July 7. Ted estimates that around 70% of his friends had bought shares. “Now that this bull market has collapsed,” he says, “wealth has been redistributed and the middle class is annihilated.”

At the market’s peak on June 12, shares had more than doubled within a single year. Yet the relentless climb of Chinese shares, even as other economic indicators such as GDP growth and electricity usage sagged, led doubters to worry about a bubble. Now, the Chinese government has tied part of its legitimacy to shoring up the stock market — risky given this week’s volatility. Such intervention also goes against Chinese President Xi Jinping’s vow in 2013 to let market forces play a “decisive role,” as part of a larger reform initiative, prompting fears that his administration isn’t as committed to liberalizing the state-dominated economy as many had hoped.

On Wednesday, President Xi, along with central banker Zhou Xiaochuan, headed to Russia to attend a BRICS summit of emerging economic powers. Canceling their trip would presumably have further spooked China’s jittery investors. But the contagion may have already spread beyond mainland China. Hong Kong’s Hang Seng Index ended trading down 5.8%, Japan’s Nikkei 225 dropped 3.1% and the Taiwan Weighted fell 2.9%. For some Asian investors, the Greek drama playing out in Europe paled to the tragedy nearer to home.

With reporting by Gu Yongqiang / Beijing

MONEY Greece

Here’s How Greece Could Affect Your Retirement Savings

Reaction As Greece Imposes Capital Control
Bloomberg—Bloomberg via Getty Images A customer places her daily cash machine withdrawal limit of 60 euros into her purse after using an automated teller machines (ATM) outside a closed Eurobank Ergasias SA bank branch in Athens, Greece, on Monday, June 29, 2015.

Your 401(k) or IRA will probably be fine

Greek leaders are scrambling to nail down a new bailout deal before July 20, when the country would otherwise default on a €3.5 billion bond repayment to European creditors and might be forced to abandon the Euro currency altogether.

As recent stock performance in the U.S. suggests, fears of what a so-called “Grexit” could do to Europe’s economy has spread to American shores. Indeed, U.S. markets may very well be choppy for at least the next several weeks until there’s more certainty about the future.

But there are many reasons to believe that any impact on your 401(k) or IRA investments would be short-lived.

For one, Greece comprises only 0.3% of the global economy. And a typical target date mutual fund, used by many retirement plans, has an even smaller sliver of exposure to the country.

Even if the worse case scenario happens and the Greek crisis affects Europe—or even causes a slowdown among U.S. companies that rely on European demand—history has shown that people who keep investing through recessions make their money back more quickly than one might expect. For example, if you had been so unlucky as to start investing $1,000 per year in the stock market right before the most recent recession, you would have made your money back after only two years post-recession.

That’s a good reason to stay calm and not do anything rash.

Certainly, investing in today’s globalized markets comes with risks. While Greece is relatively tiny, for example, China is a top global trader—and its current market crash could potentially affect economies across the world. But the fact that it’s hard to predict how market forces will play out on a global level is a reason to stay diversified, with portfolios exposed to many different countries and their economies.

Watch the video below to learn more about why foreign stocks are important to your portfolio:

TIME China

Will the Communist Party Save China’s Volatile Stock Market?

An investor holds onto prayer beads as he watches a board showing stock prices at a brokerage office in Beijing
Kim Kyung Hoon—Reuters An investor holds onto prayer beads as he watches a board showing stock prices at a brokerage office in Beijing, China, July 6, 2015

China’s top brokerages have pledged almost $20 billion to arrest a calamitous slide

Rain, like the downpours that have inundated Shanghai in recent weeks, doesn’t buoy the spirits. But don’t despair, counseled the People’s Daily, the Chinese Communist Party’s mouthpiece, on Monday: “Rainbows always appear after rains.”

That upbeat message coursed through China’s state media on Monday, referring to the dismal performance of the nation’s bourses, including the Shanghai Composite Index, which has lost nearly 30% over the past three weeks.

The chief rainbowmaker is, no surprise, the ruling Communist Party. “The Chinese government unveiled an unprecedented string of emergency and supportive measures to stabilize market sentiment,” announced state news agency Xinhua on Monday, with the nation’s central bank called in to increase liquidity.

Over the weekend, China’s top brokerages, surely encouraged by officialdom, vowed to spend nearly $20 billion to shore up the stock market. By government fiat, new stock listings are being curtailed. Foreigners have been admonished not to sell China short — as if they were the ones chiefly responsible for the stock market’s nosedive. On July 5, Beijing police arrested a man they say spread rumors that a despondent punter jumped to his death because of the stock-market plunge.

The result so far of this massive government intervention: after an 8% surge in the morning, the Shanghai index ended up 2.4% on July 6, following a 12% loss the previous week. State-owned giants led the weak recovery. In meteorological news, the plum rains are forecast to last all week in China’s commercial capital. (At close on Monday, Shenzhen’s more erratic index was down 1.39%.)

The past three weeks have seen the market shed more than $2 trillion. Still, the percentage of the Chinese population that dabbles in the stock market is comparatively low. And as brutal as the summer sell-off has seemed, shares are still up this year, with the Shanghai Composite having expanded by nearly 80% compared with roughly a year ago.

Chinese social-media users have debated whether the central government’s efforts were enough to prevent a further market nosedive. There was less discussion, however, of whether the government should be doing battle in the first place — especially given that some of the recent market frenzy has derived from risky margin trades that may be testing banks. Critics have noted that this generation of Chinese leadership, in place since late 2012, has called for market forces to gain more power, not less. The government’s latest intervention runs counter to talk of reform.

“Fragile market sentiment will be reversed,” the People’s Daily has stated. That’s about as clear a signal of official policy as the ruling Communist Party can give. Beijing, which is already facing a slowing economy, is tying part of its legitimacy to returning confidence to the nation’s stock market. When will the rainbow appear?

TIME Greece

Dow Plunges 350 Points as Possible Greek Default Looms

Eric Thayer A trader on the floor of the New York Stock Exchange.

Uncertainty rattles global markets

The uncertainty surrounding Greece’s ongoing debt crisis choked global markets on Monday, extending recent losses for the world’s stock exchanges.

The Dow Jones Industrial Average closed the day down 350 points, or 2%. The S&P 500 dropped 2.1%, ending the day at 2,058 points. Meanwhile, the tech-heavy Nasdaq composite was hit hardest, falling 122 points (or 2.4%) to end the day under the 5,000-point mark for the first time since early-May.

It was the worst day of the year for U.S. stocks.

Earlier, volatility struck markets around the world, as global markets felt the impact of the uncertainty in Greece, where banks are closed and ATM withdrawal limits have been imposed. The Chicago Board Options Exchange Volatility Index (VIX) — also referred to as the “fear index” — soared on Monday, rising by nearly 5 points, or 35%, to reach its highest levels in about four months.

Greek citizens will vote this weekend on a new bailout proposal that could bring billions of dollars in additional aid into the troubled country while installing strict austerity measures. A “no” vote on the bailout extension, meanwhile, would likely pave the way for Greece’s withdrawal from the euro zone.

Also, on Monday, ratings agency Standard & Poor’s once again downgraded Greece’s credit rating — to CCC- — in an assessment that predicted a Greek default within six months.

S&P said there’s now a 50% chance Greece will leave the euro.

In addition to fears about Greece, investors are concerned about Puerto Rico’s ability to pay its debts and continued weakness in China.

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