Sell-off turns nasty: Dow plunges 531 points

The market sell-off took on an especially nasty tone Friday as stocks dropped for a fourth straight day with the Dow plunging more than 500 points and dropping into correction territory and oil setting a new 6 1/2-year low as it dipped below $40 a barrel.

Global markets have come under pressure this week on growing concerns about a slowing Chinese economy and slumping oil prices. Fresh data from China Friday showing weaker manufacturing added to the worries.

The Dow Jones industrial average tumbled 531 points, or 3.1% , to 16,460, a day after the blue-chip index tumbled 358 points in its biggest point plunge since Nov. 9, 2011. Friday's losses sent the blue-chip index down 10.1% from its May 19 record closing high of 18,312.39 -- meaning the blue-chip gauge is officially in correction territory.

The Standard & Poor's 500 index fell 3.2% to 1971 as it sunk below 2000 and further into the red for the year. The Nasdaq composite index tumbled 3.5% to 4706.

The losses were broad-based as all 10 sectors of the S&P 500 fell with the technology and energy sectors leading the markets lower.

Concerns about global economic growth -- especially in the world's No. 2 economy, China, after it unexpectedly devalued its currency -- have been an increasing weight on the stock market. Throw in uncertainty about when the Federal Reserve is going to raise interest rates for the first time in more than a decade, and investors are losing their confidence in holding onto stocks.

The current slide really started on Tuesday and turned into a near freefall on Thursday when the Dow plunged 358 points.

Corrections have become a rare occurrence on Wall Street. The last time the benchmark S&P 500 suffered a 10% correction was in August of 2011. And that slide got even uglier, with the S&P wracking up a 19.4% loss before the selling pressure eased. Currently, the S&P is about 6.3% off its high. The small-stock Russell 2000 entered correction territory Friday as its loss hit 11%.

Oil remained under pressure Friday as U.S. crude fell as low as $39.86 a barrel -- a level last seen in February 2009 in the depths of the financial crisis. Brent crude, the international benchmark, tumbled 60 cents to $46.02 in London after losing 54 cents the previous day to close at $46.62.

Overseas, Asian markets tumbled after Wall Street's sharp drop Thursday.

Tokyo's Nikkei 225 index plunged nearly 3% and Hong Kong's Hang Seng index fell 1.9%.

The Shanghai composite index on mainland China dropped over 4%. MarketWatch reported that China's benchmark index is down 32% since June 12.

The preliminary version of China's Caixin purchasing managers' index fell to an unexpectedly low 47.1 points from July's 47.8 points on a 100-point scale. Numbers below 50 show a contraction.

China's cooling economy has caused the Shanghai index to tumble this week despite a massive government intervention. And last week's surprise devaluation of China's yuan by Beijing sent shockwaves through other emerging countries that might face tougher competition from lower-priced Chinese exports.

Japan's Nikkei newspaper quoted Friday Taro Aso, the nation's finance minister, as saying that China was a big reason why shares prices fell sharply in Tokyo.

In Europe, shares fell sharply. Germany's DAX index lost 2.9% and Britain's FTSE 100 index dropped 2.8%.

Wall Street's heavy losses Thursday came as investors grappled with fresh questions about the timing of the Federal Reserve's first interest rate hike, slowing global growth and continuing volatility in oil prices that puts U.S. crude in danger of falling below the key $40 a barrel mark.