Traders are worried that China is about to go through a credit crunch of its own; the rate that banks lend to each other has risen in recent weeks, and the People's Bank of China stated that banks must take care of their own affairs. The booming economy was fuelled on cheap and easy credit, and dealers are worried that liquidity pools could dry up which could hamper growth.
US investment bank Goldman Sachs cut its growth forecasts for China for 2013 and 2014, which is compounding the slide in equities. The Dow is down 238 points at 14,560. Not only are dealers worried about China, they are fearful the Federal Reserve will cut back on the size of their stimulus package.
This week the US has a number of big economic announcements; if they come in higher than expected, we could see US stocks fall further.