U.S. stocks fall as China slump spurs global growth worries

By Tanya Agrawal

REUTERS - U.S. stocks fell more than 1 percent on Wednesday, pushing the bluechip Dow Jones Industrial average back into negative territory for the year, as the slide in Chinese markets spurred concerns over its impact on global economic growth.

The decline in U.S. stocks pushed the Nasdaq Composite index to its lowest level in two months and the S&P 500 index to its lowest level in over four months. Concerns over China and Greece had pushed the Dow into negative territory briefly on Tuesday.

Beijing unveiled yet another battery of measures to arrest the sell-off in shares and the securities regulator warned of "panic sentiment" gripping investors in the world's second-largest economy.

Chinese shares have fallen more than 30 percent in the last three weeks, and some investors fear China's turmoil is now a bigger risk than the crisis in Greece.

"With China, investors fear that could be indicative of a broader economic weakness," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

"We've seen commodity prices fall in the recent days and there's the fear that China may be slowing down a lot more than previously thought."

Copper prices fell to a six-year low and oil prices hit a three-month low.

Fears of a slow down in China will be a concern for U.S. companies, especially materials and industrial companies, which derive a chunk of their profit from the region.

Alcoa reports results after the close of markets, kicking off the quarterly earnings season. U.S. corporate profits are expected to have fallen 3.1 percent in the second quarter, according to Thomson Reuters estimates data.

At 10:43 a.m. ET the Dow Jones industrial average was down 171.63 points, or 0.97 percent, at 17,605.28, the S&P 500 was down 20.82 points, or 1 percent, at 2,060.52 and the Nasdaq Composite was down 58.15 points, or 1.16 percent, at 4,939.31.

All the 10 major S&P 500 sectors were lower, with the telecommunications index down 1.6 percent.

U.S.-listed shares of Chinese companies took a beating, with Alibaba falling 1.9 percent. Baidu fell 3.2 percent and Weibo fell 3.8 percent.

Euro zone members have asked Greece to come up with new proposals for a special EU summit on Sunday.

Investors looking for clues on the timing of a U.S. interest rate hike will study the minutes from the U.S. Federal Reserve's June 16-17 meeting, due at 2 p.m. ET.

United Airlines was down 2.2 percent at $53.11 after its flights at all U.S. airports were briefly grounded due to computer issues.

Tesla Motors fell 4.4 percent to $255.99 after Pacific Crest downgraded the stock to "sector weight" from "overweight" on valuation, the second rating cut in two days.

Declining issues outnumbered advancers on the NYSE by 2,381 to 491. On the Nasdaq, 2,100 issues fell and 498 advanced.

The S&P 500 index showed one new 52-week highs and seven new lows, while the Nasdaq recorded 16 new highs and 57 new lows.

(Editing by Savio D'Souza)