US Stocks Drop Sharply, Tracking Overseas Losses

U.S. stocks dropped Monday, tracking steep losses overseas amid a backdrop of economic worries.

Shortly after the opening bell, the Dow Jones Industrial Average was lower by about 190 points. The S&P 500 was down 2.2%, led by drops of more than 4% in its basic-materials sector and sharp drops in other categories including energy, financials, industrial and consumer-discretionary stocks. The Nasdaq Composite Index sank 2.3%.

Lower commodity prices, persistent worries over tightening in bank loans and weak economic data damped investor sentiment, leading to a sharp decline in overseas stock markets.

China's Shanghai Composite Index posted its biggest percentage decline since November, falling 5.8% to end below 3,000 since June. Metals stocks were hit hardest, with Angang Steel and Yunnan Copper dropping by the 10% limit in Shenzhen, while Aluminum Corp. of China and Jiangxi Copper dropped by as much in Shanghai.

Japan's Nikkei Stock Average fell 3.1%. Data showing Japan's second-quarter gross domestic product registered its first quarterly growth in five quarters did little for the Tokyo markets. GDP grew 0.9% from the previous quarter, short of the 1% rise expected in a Dow Jones Newswires poll of economists.

The selloff rippled into Europe, were major stock benchmarks were weaker in recent activity. The U.K.'s FTSE 100 and Germany's DAX index were down by about 1.5%.

The September Nymex crude-oil futures contract was down $1.46 at $66.05 a barrel. On Friday, Nymex crude shed $3.10 to $67.51 a barrel, breaking out of the $68-$70 range it's held since the start of August as stock markets wilted.

Stocks snapped a four-week winning streak Friday after a worse-than-expected consumer-sentiment reading. More disappointing reports on the consumer were out Monday after home-improvement retailer Lowe's reported a 19% decline in second-quarter earnings, missing Wall Street expectations. Its shares sank more than 9%.

Home Depot, a Lowe's rival and component of the Dow industrials, declined by more than 5%. It reports earnings later this week.

"The consumer confidence and retail issues are huge in the U.S. and markets are very worried about it," said David Buik, senior partner at BCG Partners in London.

Data on other areas of the economy showed some improvement. The New York Federal Reserve said its Empire State index of manufacturing conditions rose to 12.08 in August from -0.55 in July. The August reading was the report's highest level since November 2007.

Treasury prices rose as investors sought safe havens. The benchmark 10-year note rose 16/32 to yield 3.51%. Yields move inversely to prices. Three-month dollar Libor moved up to 0.43125% from Friday's 0.42938%, its first move up in 16 days. The three-month rate peaked at 4.81875% on Oct. 10.

The dollar was weaker against the yen and stronger against the euro.