A rally on Wall Street evaporated on Tuesday and stocks ended with deep losses as concerns about China’s economy outweighed lower valuations that some earlier saw as bargains.
In a dramatic session, major indices turned negative in the final minutes of trading after previously climbing almost 3 percent.
Investors cited more worries that a slowdown in China could hobble global growth, even after the country’s central bank cut interest rates on Tuesday for the second time in two months. The move came after Chinese stocks slumped 8 percent on Tuesday, on top of an 8.5 percent drop on Monday.
“People are still nervous about overseas and what might happen tonight. Nobody wants to sit around and see what happens,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Tuesday’s drop followed steeper losses on Monday, when the Dow Jones industrial average .DJI slid more than 1,000 points at its lows and the benchmark S&P 500 .SPX recorded its worst day since 2011.
In the past week, the S&P has lost 11 percent.
The Dow has fallen 10.5 pct over the last five sessions, marking its biggest five-day fall since August 2011.
“Investors are still concerned about exogenous growth and shifting Fed policy, and both of those are still on the table,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The Dow Jones industrial average .DJI fell 204.91 points, or 1.29 percent, to end at 15,666.44.
The S&P 500 .SPX lost 25.59 points, or 1.35 percent, to finish at 1,867.62 and the Nasdaq Composite .IXIC dropped 19.76 points, or 0.44 percent, to 4,506.49.
Earlier, the S&P rose as much 2.9 percent, the Dow as much as 2.8 percent and the Nasdaq as much as 3.6 percent.
JPMorgan cut its year-end target for the S&P 500 to 2,150 from 2,250.
In the sixth straight session of losses for the S&P 500, all of the 10 major sectors were lower, with the utilities index’s .SPLRCU 3.2-percent drop leading the decline.
Pepco Holdings Inc (POM.N) fell 16.47 percent after a District of Columbia regulator denied Exelon Corp’s $6.8 billion bid for the power utility, possibly delivering a knockout blow to the deal.
The recent pummelling in U.S. shares has reduced valuations some investors had seen as pricey. The S&P 500 was down to about 15 times expected earnings, compared to around 17 for much of 2015 and just above a 10-year average of 14.7, according to Thomson Reuters StarMine data for Monday, the most recent available.