US stocks drop as China equity slump deepens

New York - US stocks tumbled in early trade on Wednesday as another big drop in the Chinese equity markets amplified concerns about the world's second-biggest economy.

About 35 minutes into trade, the Dow Jones Industrial Average was at 17 564.26, down 212.65 points.

The broad-based S&P 500 dropped 1.19% to 2 056.67, while the tech-rich Nasdaq Composite Index plunged 1.39% to 4 928.12.

The benchmark Shanghai Composite Index closed down 5.90% with a Chinese securities official decrying "panic and irrational" selling. Chinese stocks have dropped more than 30% since mid-June.

"The concern is that the popping of this bubble may seriously crimp the already slowing Chinese economic growth rate," said Briefing.com.

European stocks rallied, but Briefing.com said the rise was based on "questionable assumptions" underlying a hoped-for deal to resolve the Greek debt crisis.

Dow member Microsoft gained 0.3% on news it will cut 7 800 jobs on top of the 18 000 eliminated a year ago. The moves will be accompanied by a $7.6bn writedown in its struggling mobile phone division, which will be reorganized.

Apple fell 1.8%. 24/7 Wall Street pointed to worries that second-quarter earnings will be dented by weak Apple Watch and iPhone sales.

United Continental dropped 2.1% as US flights were grounded for about 80 minutes due to what it called a "network connectivity issue." It was the second time in six weeks United flights have been grounded due to a computer problem.

Other airlines also fell, including Delta Air Lines (-1.9%) and American Airlines (-2.3%).

US-listed Chinese stocks fell again, including e-commerce giant Alibaba (-2.3%), Qihoo 360 Technology (-1.0%), an Internet services and security company, and Internet search company Baidu (-2.7%).

The Container Store, a retailer of organizing and packaging products, jumped 7.3% after reporting that first-quarter comparable sales fell 0.9%, better than the 3% to 4% drop it had projected.

Online security company Symantec shed 0.2% following reports it is close to a deal to sell its Veritas data-storage business to Carlyle Group for $7bn to $8bn. Carlyle Group dropped 2.3%.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.24% from 2.26% on Tuesday, while the 30-year declined to 3.02% from 3.04%. Bond prices and yields move inversely.