Stock market takes its worst hit in four years

The Dow Jones industrial average has plunged more than 530 points and is in a correction amid a global sell-off sparked by fears about China's slowing economy. Oil tumbled below $40 per barrel for the first time since the financial crisis.

NEW YORK (AP) — U.S. stocks are dropping sharply for a second day following a sell-off in major indexes around the world on more signs that China's economy is slowing. The selling was widespread, with all 10 industries of the Standard and Poor's 500 down, and gathered strength in the afternoon.

Oil plunged below $40 for the first time since the financial crisis, and government bonds rallied as investors scooped them up in a flight to safety. The Standard & Poor's 500 index was on track for its worst week since 2011.

The selling began in Asia, then spread to Europe, with major indexes there losing more than 2 percent. Gold, a traditional haven for fearful investors, rose for a second day.

Markets began falling last week after China announced a surprise devaluation of its currency, the yuan. Investors interpreted the move as a sign the slowdown in the world's No. 2 economy could be more extreme that they had thought. On Friday, they got more bad news: A survey showed the manufacturing sector on the mainland continues to contract.

Investors are also worried about more turmoil in Greece after the resignation of its prime minister.

KEEPING SCORE: The Dow Jones industrial average was down 408 points, or 2.4 percent, to 16,580 as of 3:09 p.m. Eastern time. The Standard & Poor's 500 index dropped 50 points, or 2.5 percent, to 1,985. The Nasdaq skidded 133.21 points, or 2.7 percent, to 4,745.

TECH CORRECTION?: The Nasdaq is now about 8 percent off its recent high of 5,218.86 on July 20. That puts it within shooting range of what traders call a "correction," or a fall from a high of more 10 percent. Apple plunged $5.61, or 5 percent, to $107.07.

BROAD DROP: All 10 sectors of the S&P 500 fell, led by a 3 drop in information technology shares.

CHINA JITTERS: In China, a preliminary version of a gauge of business activity, the Caixin purchasing managers' index, fell to an unexpectedly low 47.1 points. Numbers below 50 show a contraction.

The devaluation of the yuan last week has shaken confidence in the world's No. 2 economy. The Shanghai Composite index suffered another steep drop of 4.3 percent on Friday.

THE QUOTE: "China has been on a mission to keep up the illusion of a gradual slowdown, but dealers aren't buying it anymore," said David Madden, market analyst at IG.

OH, DEERE: Deere & Co. fell $7.10, or 7 percent, to $83.55 after it cut its full-year outlook. It said it expects the weak agriculture and energy sectors to continue dragging down equipment sales.

EUROPE DOWN: In Europe, France's CAC-40 declined 3.2 percent while Germany's DAX fell 2.9 percent. In Britain, the FTSE 100 index was down 2.8 percent.

GREECE BACK, TOO: Greece looks headed for another election on Sept. 20 provided opposition parties can't form a new government. Prime Minister Alexis Tsipras is hoping to capitalize on his personal popularity in the election as he seeks a new mandate to govern. The country earlier this week got its hands on the first tranche of cash from its third international bailout.

ANALYST TAKE: "While the decision to have a new vote is likely to increase political uncertainty in the short term .... the hope is that the more dysfunctional members of his government will get pushed to the sidelines," said Michael Hewson, chief market analyst at CMC Markets.

ASIA'S DAY: Tokyo's Nikkei 225 was off 3 percent, Seoul's Kospi shed 2 percent and Hong Kong's Hang Seng fell 1.5 percent.

ENERGY: A slowdown in China has the potential to significantly crimp demand for oil. The benchmark U.S. crude plunged $1.27. or 3 percent, to $40.05 per barrel on the New York Mercantile Exchange. It has now been in decline for eight consecutive weeks, the longest streak since 1986. Brent crude, which is used to price international oils, fell $1.33 to $45.30 in London.

CURRENCY MARKETS: The euro rose 1.2 percent to $1.1369. The dollar fell 1.1 percent lower at 122.03 yen.