US stocks plunged for a second day in a row Friday, clobbered by fears of slowing economic growth around the world that could threaten one of the longest-running bull markets in history. The sell-off followed sharp declines in Asia and Europe.
The Dow Jones industrial average sank 530.94, or 3.1 percent, to 16,459.75, the biggest percentage-point loss since November 2008. The widely followed index of 30 stocks lost 6 percent over the week, the steepest drop since 2011.
The Dow’s decline of more than 10 percent from its May peak is considered a market “correction,” but does not qualify as a bear market — generally defined as a retreat of at least 20 percent. The broader Standard & Poor’s 500 index is off 7.5 percent since cresting May 21.
The selling marked one of the most serious setbacks to a stock rally that began near the end of the Great Recession in 2009. The Dow average has since climbed 163 percent, even after this week’s losses are taken into account. But declines this week clearly shifted the psychology of stock market traders.
“For much of this year, the glass was considered half full and now people the last 48 hours are thinking it’s looking more empty,” said George Hashbarger of Quintium Advisors LLC in Knoxville, Tenn.
Concerns about growth around the world accelerated after last week’s decision by China to devalue its currency, widely seen as an indication of a slowdown in the world’s second-largest economy that would put pressure on prices of goods and services everywhere.
This week, new data showed the country’s manufacturing at its lowest level in more than six years.
“China is essentially exporting deflation to the rest of the world,” said Jurrien Timmer, a market strategist at Fidelity Investments in Boston.
The Federal Reserve is considering a move to raise short-term interest rates above near-zero for the first time in nearly seven years. But minutes from the previous meeting of rate-setting regulators, released this week, raised concerns that the economy might not be strong enough to withstand an increase. Most economists had expected them to raise rates slightly at their next meeting in September.
Prices of oil and many other commodities have also fallen sharply due to concerns about the global economy. US oil traded below $40 per barrel for the first time in six years Friday, though it ended the day at $40.45.
Around the world, money has been moving into currencies and investments generally considered safe havens in uncertain economic times — such as US Treasury securities and gold. Some other currencies, including the euro and the Japanese yen, have also gained value in recent days.
Stocks around the world have lost more than $3 trillion in value since China decided to devalue its currency. The week’s sharp stock selloff started in emerging markets but quickly spread to Europe and the United States.
“The big question is, will the US economic recovery be threatened by weakness in China,” said Timmer. “My sense is that it will not.”
Sinking oil prices have hurt the stocks of many energy companies and an increasingly strong US dollar will challenge American exporters.
Many of the market’s best-known and popular stocks have been among the hardest hit recently. Companies known as the Fab Five — Apple Inc., Amazon.com Inc., Facebook Inc., Netflix Inc. and Google Inc. — lost a combined $97 billion in market value during the last two days.
Locally, many of the most successful stocks in Massachusetts suffered Friday. Vertex Pharmaceuticals Inc. of Boston saw its shares fall 5.6 percent. The stock of Cambridge-based Biogen Inc. fell 4.6 percent, and Skyworks Solutions Inc. of Woburn, a popular maker of cellphone components, slid 4.1 percent. Even shares of Framingham’s TJX Cos., the big off-price clothing retailer, slipped 3.7 percent.
Around the world, many economies are struggling. Last week, Japan said its economy, which had been showing signs of revival, actually shrank during the second quarter of the year.
Other smaller economies that depend on the export of commodities will come under increasing pressure.
“Commodity markets will remain weak and this reflects excess global supply,” said economist Sara Johnson of IHS Global in Lexington.Material from Bloomberg News was used in this report. Steven Syre can be reached at firstname.lastname@example.org.