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Wall Street Tumbles at Open on Fed, China Debt Fears; Dow Down 490 Pts By


© Reuters.

By Geoffrey Smith — U.S. stock markets tumbled at the open on a combination of worries from China’s mounting debt problems to the outcome of this week’s policy meeting at the Federal Reserve.

By 9:35 AM ET (1335 GMT), the was down 488 points, or 1.4%, at 34.097 points, its lowest in two months. The was down 1.5%, also at a two-month low. while the was down 1.6% at a one-month low. 

Market sentiment has clearly deteriorated in recent days, with a series of warnings about a possible correction from the likes of Goldman Sachs (NYSE:) and Morgan Stanley (NYSE:). The latter’s analysts said in a note to clients at the weekend that they see an increasing risk of a 20% drop in the S&P 500, against a backdrop of gradually tightening monetary policy and the withdrawal of fiscal stimulus in the U.S., as well as foreign risks such as a debt crisis in China and a slowdown in Europe caused by soaring energy prices.

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