The Dow Jones Industrial Average ended the trading day down nearly 2.4% Friday, amid fears over plummeting oil prices and a slowdown in China.
The rout, which also saw the S&P 500 drop 2.16%, squashed hopes that American markets might dodge the turmoil plaguing international trading floors late this week. It was the worst ten-day start to a year since records began.
Oil’s fall to levels not seen since 2003 spooked investors for two reasons. First, it’s a nasty turn of events for energy firms, some of which are among the world’s biggest companies. But more broadly speaking, oil is seen as a proxy for global demand. Falling oil prices suggest overall demand is low, a sign the global economy may be cooling off.
China’s deceleration is another bad sign for investors, as any downturn on the part of the world’s second-largest economy is sure to have negative impacts across the global economy.