US open: Dow plunges over 300 points as disappointing data weighs on sentiment

US stocks plunged early on Tuesday, as disappointing data from China weighed on sentiment.

Just after 1500 BST, the Dow Jones Industrial Average was down 361 points to 16,166.94, while the S&P 500 and the Nasdaq were respectively down 41 and 81 points.

Chinese data disappoints

The official Chinese manufacturing sector purchasing managers' index fell to a three-year low of 49.7 in August from a print of 50 the month before, while the Caixin China manufacturing PMI hit a six-and-a-half year low of 47.3.

The Shanghai Composite ended down 1.2%, while the Hang Seng fell 2.2% and Japan’s Nikkei slumped 3.8%.

“Chinese markets have started the week just as the past three weeks have begun, with widespread selling and the expectation that the worst may not yet be over,” said IG’s market analyst Joshua Mahony.

“There are precious few signs that China is beginning to recover, and while PBoC action can provide a temporary reprieve, we are yet to see any evidence that it is doing any good to the economy.”

Elsewhere, European equity markets slid on Tuesday, kicking the new month off on a downbeat note as weak Chinese manufacturing data compounded worries about a slowdown in the world’s second-largest economy.

The dollar edged 0.22% higher against the pound, but it shed 0.24% and 0.91% against the euro and the yen respectively, while gold futures climbed 0.96% to $1,143.40.

Oil prices fell, with West Texas Intermediate losing 3.71% to $47.44 a barrel, while Brent lost 3.97% to $52.08 a barrel.

Tuesday data

The Institute for Supply Management revealed its manufacturing index declined from 52.7% to 51.1% in August, falling below the 52.2% reading analysts had expected.

The sub-index monitoring new orders fell 4.8 points to 51.7%, the lowest since May 2013, while the employment gauge edged 1.5 points lower to 51.2%.

Meanwhile, according to the Commerce Department, outlays for construction projects rose 0.7% in July to a seasonally adjusted rate of $1.08trn, the highest level since May 2008 and in line with expectations.

June’s gain was revised upwardly to show a 0.7% jump compared to the 0.1% increase that had originally been reported.

In other economic news, the final Markit US PMI came in at 53.0 in August, slightly lower than the 53.8 figure reported in July.

In company news, oil-related stocks were among the biggest fallers, with Chevron falling 1.98%m while Transocean lost 2.39% and Marathon Oil slid 3.41%.