Stocks in steep sell-off on China economic worries

NEW YORK  — Another slump in the Chinese stock market spread across the globe Thursday, causing steep declines in U.S. and European shares, and dragging the Standard & Poor's 500 index into the red for 2015.

Keeping score: The Dow Jones industrial average fell 297 points, or 1.7 percent, to 17,052 as of 2:45 p.m. Eastern time. The S&P 500 index lost 36 points, or 1.7 percent, to 2,043 and the Nasdaq composite fell 120 points, or 2.4 percent, to 4,899.

The S&P 500 is now down 0.8 percent for 2015. The Dow is off 4 percent while the Nasdaq, fueled partly by strong gains in Google and other tech stocks, is up 3.4 percent.

China concerns: Worries over China, the world's second-largest economy, were again the catalyst for Thursday's losses. The Shanghai Composite Index dropped 3.4 percent on heavy selling of energy and property companies.

Chinese shares have had a wild ride this week and that has raised uncertainty about Beijing's ability to stabilize the market and its surprising devaluation of its currency, the renminbi, last week. China's devaluation has caused other countries to in turn devalue their own currencies, notably the oil rich country of Kazakhstan and the Southeast Asian manufacturing center of Vietnam.

"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.

It's technical: Strategists and traders, noting the lack of major U.S. economic news on Thursday, said the heavy selling of stocks is likely tied to programmed selling. While many investors pick and choose stocks based on a company's business outlook, there is an entirely different class of trader who relies on technical indicators to make investment decisions.

The S&P 500 has broken below one of the most closely watched indicators, its 200-day moving average.

"I see this drop as likely because we crossed the 200-day moving average, and that's causing us to have further selling," said Scott Wren, chief global equity strategist at the Wells Fargo Investment Institute.

Not so magic kingdom: Walt Disney fell $6.41, or 6 percent, to $100.04 after analysts downgraded their outlook on the company. Analysts are concerned that television watchers are choosing to move away from cable, which could hurt lucrative Disney properties such as ESPN.

Drug dealmaking: Valeant Pharmaceuticals fell $14.90, or 6 percent, to $230.05 after the company announced it would spend $1 billion on Sprout Pharmaceuticals, the owner of the first female sexual performance drug approved by regulators. The drug Addyi was approved Wednesday by U.S. regulators.

Energy: Oil prices fell 14 cents to $41.13 a barrel in New York. Brent crude, which is used to price international oils, slid 16 cents to $46.46 a barrel. Oil is trading at near six-year lows, which in turn has hammered energy and oil stocks like Chevron, Exxon Mobil and Transocean.

Currencies: The dollar fell to $1.12 against the euro.