The Dow industrials tumbled more than 200 points today before recovering slightly as stocks plunged worldwide following a market panic in Hong Kong that aggravated fears about deteriorating business conditions in Southeast Asia.
The Dow Jones Industrial Average was down 166.50 at 7,868.15 at 3 p.m. after sliding to a deficit of nearly 230 points just before 2 p.m.
Broader stock measures were down more than 2 percent, and declining issues outnumbered advancers by more than a 5-to-1 margin on the New York Stock Exchange.
The damage was heavier on overseas markets. Tokyo's Nikkei stock average fell 3.0 percent, Frankfurt's DAX index fell 4.7 percent and London's FT-SE 100 fell 3.1 percent.
Big losers in London included companies with close ties to Hong Kong. The banking company HSBC Holdings PLC, whose operations include Marine Midland Bank of Buffalo, finished off 8.8 percent.
But U.S. Treasury bonds shot higher, sending interest rates sharply lower and cushioning U.S. equity markets, as investors at home and abroad sought out the perceived safety of fixed-income securities and a stable American economy.
The worldwide downturn was triggered by a shocking 10 percent tumble in the Hang Seng index of Hong Kong that deepened fears about weaker profits for companies that depend on Asian markets for a portion of their profits.
"These fears (about profits) are fairly genuine," said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore, noting that multinationals such as Coca-Cola and Gillette already have seen their profits hurt by the turmoil that took hold in Asian markets during the summer.
Cripps also cautioned, however, that "perception is usually worse than reality." Even among U.S. companies with exposure to Asian markets, he said, "the impact is slight. It may impact up to 5 percent of sales, and a small amount of profits."
Today's downturn was the latest setback in the U.S. stock market's struggle to fully recover from a steep slide in August.
The NYSE composite index was down 9.68 at 499.12.
The Nasdaq composite index was down 41.90 at 1,666.18.