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Fear of slowing growth pushes down global markets

  • Specialist Vincent Surace works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)

    Specialist Vincent Surace works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014. (AP Photo/Jason DeCrow)

  • Specialist Vincent Surace works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)

    Specialist Vincent Surace works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014. (AP Photo/Jason DeCrow)

  • Traders work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)

    Traders work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014. (AP Photo/Jason DeCrow)

  • Trader Gregory Rowe, center, works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)

    Trader Gregory Rowe, center, works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014. (AP Photo/Jason DeCrow)

  • Trader Gregory Rowe, center, works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)

    Trader Gregory Rowe, center, works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014. (AP Photo/Jason DeCrow)

  • Traders Thomas Donato, left, and Ronald Madarasz work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)

    Traders Thomas Donato, left, and Ronald Madarasz work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014. (AP Photo/Jason DeCrow)

  • Traders Thomas Donato, left, and Ronald Madarasz work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)

    Traders Thomas Donato, left, and Ronald Madarasz work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014. (AP Photo/Jason DeCrow)

  • Specialist Vincent Surace works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)
  • Specialist Vincent Surace works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)
  • Traders work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)
  • Trader Gregory Rowe, center, works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)
  • Trader Gregory Rowe, center, works on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)
  • Traders Thomas Donato, left, and Ronald Madarasz work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)
  • Traders Thomas Donato, left, and Ronald Madarasz work on the floor of the New York Stock Exchange Friday, Jan. 24, 2014.  (AP Photo/Jason DeCrow)

Investors are worried about slower economic growth in China, a gloomier outlook for U.S. corporate profits and an end to easy money policies in the United States and Europe. They’re also fretting over country-specific troubles around the world – from economic mismanagement in Argentina to political instability in Turkey.

Those fears converged to start a two-day rout in global markets this week, capped by a 318-point drop in the Dow Jones industrial average yesterday. It was the blue-chip index’s worst day since last June. The Dow plunged almost 500 points over the two-day stretch.

The Dow finished down 2 percent at 15,879 yesterday. The Standard & Poor’s 500 index fell 38 points, or 2.1 percent, to 1,790. The Nasdaq composite fell 90 points, or 2.2 percent, to 4,128.

Small-company stocks fell even more than the rest of the market as investors shunned risk.

Despite the sell-off, U.S. stocks remain near all-time highs after surging 30 percent last year. The S&P 500 is 3 percent below its record high of 1,848 on Jan. 15.

U.S. stocks have not endured a correction – a drop of 10 percent or more over time – since October 2011.

The turbulence coincides with a global economic shift: China and other emerging market economies appear to be running into trouble just as the developed economies of the United States and Europe finally show signs of renewed strength nearly five years after the end of the Great Recession.

The trouble began Thursday after a January survey showed a drop in Chinese manufacturing activity. Days earlier, China reported that its economic growth last year matched 2012 for the slowest pace since 1999.

“It is interesting how even a mild tremor in China’s growth causes such anxiety around the world,” said Eswar Prasad, professor of trade policy at Cornell University.

In Asia yesterday, Japan’s Nikkei 225 slipped 1.9 percent to close at 15,391.56; Hong Kong’s Hang Seng shed 1.2 percent to 22,450.06; and Seoul’s Kospi dropped 0.4 percent to 1,940.56.

Slower growth in China is bad news for countries that supply oil, iron ore and other raw materials to the world’s second-biggest economy.

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