Business

Dow closes down 588 points after historic roller coaster

Stocks plummeted more than 1,000 points minutes after the opening bell on Monday, and then seesawed throughout the day before finishing down 588.40 — the steepest one-day slide in four years.

The market’s volatility had investors from Wall Street to Main Street gritting their teeth, as experts’ fears grew over a continuing slump — or even recession — and everyday Americans fretted about their 401(k)s.

The Dow finished the day at 15,871.35, down 3.57 percent — a dramatic difference from the record high of 18,312 on May 19. It was the second straight drop of more than 500 points and the biggest single-day plunge since the market tanked by 634 points, or 5.55 percent, on Aug. 8, 2011.

The sell-off was sparked by the slowdown in China that had already shaken markets around the world on Friday.

And on Tuesday morning, Chinese stocks were tumbling again, although most other Asian markets appeared to be rebounding.

The Shanghai Composite Index fell 6.4 percent in the first minutes of trading, but later trimmed some of those losses and was down 5.5 percent. And China’s Shenzhen Composite Index lost 4.6 percent.

Wall Street has been on shaky ground since China debased its currency two weeks ago, causing investors to fear financial conditions there are worse than Chinese leaders led the world to believe.

“There’s a sense that Beijing has really, I don’t want to say lost control, but could no longer effectively manage their markets the way they had in the past,” Jack Ablin, chief investment officer of BMO Private Bank, told The Post.

J.J. Kinahan, the chief strategist for TD Ameritrade, added, “What’s a company that’s doing business with China actually worth right now? When you’re not sure, you tend to sell.”

Worried analysts, meanwhile, saw no end in sight, as global markets took a beating Monday, and the price of a barrel of crude oil plunged $2.21 to finish at $38.24, the lowest closing since Feb. 18, 2009. Experts predicted the drop could further erode confidence in equities.

“I don’t know how long it’s going to last and how deep it’s going to go,” said Sam Stovall, stock strategist at S&P Capital IQ.

The panicked trading could continue until the middle of September before leveling off at the end of the year if this slide follows previous patterns, Stovall added.

“Nobody really knows for sure, from a fundamental perspective, will we go into recession, will China go into recession?” Stovall asked.

Even the CEO of Starbucks weighed in, suggesting the drop in equities would make his customers more jittery than would a double espresso.

“Our customers are likely to experience an increased level of anxiety and concern,” Howard Schultz said in a midday letter to his employees.

“Let’s be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations.”

Stocks had been on a bull run for more than six years, after bottoming out in March 2009 in the aftermath of the financial crisis and the Great Recession.

But some experts claimed they had expected a correction or at least a sell-off for months as prices reached record highs.

“I’ve been of the view since late last year that this market is in a vulnerable position. It’s gone almost straight up for six years,” said Jim Paulsen, chief investment strategist and economist for Wells Capital Management.

The White House said it was “closely monitoring global markets.”

“We’ve seen a lot of volatility in China’s stock markets over the last several weeks,” said Josh Earnest, a White House spokesman.

While the market’s wild moves were shocking, they didn’t come close to setting a record.

On Black Monday — Oct. 19, 1987 — the Dow fell 22.6 percent.

And the largest single-day point decline was 777 points on Sept. 29, 2008, as the economy went bust.

Still, traders outside the New York Stock Exchange were in a gloomy mood Monday.

“This is not a normal situation. There are some bubbles about to burst. China does not have the institutions to cope with this. It’s going to get worse before it gets better,” said analyst Alan Parvati. “China’s construction industry absorbed the crisis seven years ago, but it was all state supported. You can only build so many empty cities.”

But not everyone believes the sky is falling.

Bob Daley, a day trader with Radius Global Market Research, called the plunge an overreaction.

“Lots of people are spooked right now, but you have to keep things in perspective,” he said. “The Dow opened a thousand points down, but now [at noon] it’s [down] 400. People who bought this morning made money.”

With AP