Dow cuts losses in half, still down 400 points

U.S. stocks plummeted on Monday, following a renewed rout in global markets, under severe pressure from continued fears of slowing growth in China spilling over internationally.

The Dow Jones industrial average fell as much as 1,089 points in the open.

S&P 500 briefly lost 100 points in the open, joining the other major averages in correction territory.

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Stock index futures for several major indices fell several percentage points before the open to hit limit down levels.

Circuit breakers for the S&P 500 will halt trade when the index decreases by the following three levels: 7 percent, 13 percent, and 20 percent, from its previous close.

“Fear has taken over. The market topped out last week,” said Adam Sarhan, CEO of Sarhan Capital. “We saw important technical levels break last week. Huge shift in investor psychology.”

Read More Week ahead: Markets seek clarity from China, Fed

“The market is not falling on actual facets of a sub-prime situation. It’s falling on fear of the unload of China. That’s really behind this move,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

The New York Stock Exchange is invoking Rule 48 for the Monday stock market open, Dow Jones reported.

The rule allows NYSE to open stocks without indications. “It was set up for situations like this,” said Art Hogan, chief market strategist at Wunderich Securities. It was last used in the financial crisis.

European stocks plunged more than 4 percent, while the Shanghai Composite dropped 8.5 percent, its greatest one-day drop since 2007.

The Dow Jones industrial average traded about 500 points lower, off 3 percent, at 15,984, with Visa leading all blue chips lower.

The S&P 500 traded down 61 points, or 3.11 percent, at 1,910, with financials leading all 10 sectors lower.

The Nasdaq Composite traded down 157 points, or 3.3 percent, at 4,546.

The CBOE Volatility Index (VIX), considered the best gauge of fear in the market, leaped above 50 for the first time since February 2009.

About 50 stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 337 million and a composite volume of 1.1 billion as of 10:09 a.m.

On tap this week:

Monday

3:55 p.m.: Atlanta Fed President Dennis Lockhart

Tuesday

9 a.m.: S&P/Case-Shiller home prices, FHFA home prices

10 a.m.: New home sales, Consumer confidence

1 p.m.: $26 billion 2-year note auction

Wednesday

8:30 a.m.: Durable goods

9:45 a.m.: Services PMI

10 a.m.: New York Fed President Dudley on regional economy, Q&A

1 p.m.: $35 billion 5-year note auction

Thursday

Jackson Hole Fed symposium begins

8:30 a.m.: Initial claims

8:30 a.m.: Real GDP Q2 (second)

10 a.m.: Pending home sales

1 p.m.: $29 billion 7-year note auction

Friday

8:30 a.m.: Personal income

10 a.m.: Consumer sentiment

Saturday

12:25 p.m.: Fed Vice Chairman Stanley Fischer at Jackson Hole; topic U.S. inflation

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