U.S. stocks extended their three-month lows, with the Dow Jones Industrial Average dropping more than 390 points to post its biggest two-day drop since August, amid a China-led rout that continued to engulf markets around the globe.

The Standard & Poor’s 500 Index slid 2.4 percent to 1,943.09 at 4 p.m. in New York, falling to its lowest since Oct. 1 in the worst start to a year in data going back to 1928.

Equity markets worldwide tumbled after Chinese stock exchanges closed less than a half hour after opening, as a more than 7 percent plunge triggered a market-wide halt for the second time this week. China’s securities regulator has since suspended a new stock circuit-breaker that caused the halts.

A flight from risky assets in the first week of the new year has wiped $2.5 trillion from global equities, made worse by China’s central bank cutting its yuan reference rate for an eighth straight day. China’s tolerance for a weaker yuan is being seen as evidence policy makers are struggling to revive an economy that’s the world’s biggest consumer of energy, metals and grains.

Source : Bloomberg