KELLY MCEVERS, HOST:
Last year was a pretty unimpressive one for the stock market, and 2016 isn't starting off so well either. All over the world today, in Asia, Europe and the U.S., stock prices were down. The Dow Jones Industrial average was down 276 points. That's more than 1-and-a-half percent. The S&P 500 was also down more than 1-and-a-half percent. It lost 31 points. We're joined now by NPR's Jim Zarroli. And Jim, what is the best explanation for what happened today?
JIM ZARROLI, BYLINE: Well, yeah, it was a pretty bad day in the markets. It got better as time went on - as the afternoon went on, but for much of the day, it was just a route. Even the FANG stocks, which is an acronym for Facebook, Amazon, Netflix and Google, which are the stocks that did well last year, were down. What happened was - this appears to have started in China. A report came out saying manufacturing activity in China was worse than expected. The government of Beijing has been trying to stimulate the economy by cutting interest rates and doing more government spending. It hasn't really worked yet, so you saw this plunge in stocks - Chinese stock market down by 7 percent.
MCEVERS: I mean, how has...
ZARROLI: And the...
MCEVERS: Sorry. How is it that a downturn in Chinese manufacturing can have such an effect on everybody in the rest of the world?
ZARROLI: Well, I mean, it's sort of in the nature of the markets. This is not really about manufacturing. It's not about China. I think what investors are really worried about now is, you know, so much of the world is slowing down. You have really big slowdowns in places like Brazil and Russia. But even in the places that are still sort of holding their own, like the United States, like parts of Europe, there's this fear of a slowdown, really paralyzing fear. Demand isn't really strong right now in a lot of places. The fear is, it's going to weaken further. Now, China is still growing a lot. And objectively, you know, it's not in really bad shape. But China is a huge part of the global economy. And people look, and they say, well, if China keeps slowing down, what's going to happen to everyone else, you know? What's going to happen to Brazil and Russia?
MCEVERS: I mean, you talk about this slowdown in all these places around the world. What is that going to do to what, you know, we're feeling now is an economic recovery here in the U.S.?
ZARROLI: Well, one of the problems that the U.S. has right now is this - a dollar that's getting stronger against virtually every major currency. It makes it harder for exporters in the United States to sell products abroad. You saw a survey come out today that said U.S. manufacturing is suffering, and one of the reasons for that is exports are down. But here's the thing about the U.S. economy. Exports aren't as important as consumer spending. And right now, consumers are spending. They're - that consumer spending is still doing well. Unemployment has come down. So the U.S. is surviving, doing pretty well right now even with all these other countries in trouble. Now, at some point, if that changes, if, you know, other - begins to hurt the U.S. economy, enough companies feel the pain that the, you know, growth could slow here, but it doesn't seem like that's on the horizon right now.
MCEVERS: And quickly, we've been talking in the program today and in other places that we're seeing an escalating conflict between Saudi Arabia and Iran.
ZARROLI: Yeah.
MCEVERS: Was this a factor at all to the markets today?
ZARROLI: You know, it might be something of a factor. Markets don't like uncertainty, and if this gets worse, it just makes everybody nervous. You know, this is an important part of the world as far as trade routes go. And of course, there's the oil market. We have a glut of oil right now, which is why prices have fallen so much. If tensions get too high, that could start to dry up, you know, which is why oil prices were actually up a bit more day. They'd fallen so much, but they actually crept up a bit.
MCEVERS: That's NPR's Jim Zarroli on the slide of stocks around the world in what was the first trading day of 2016. Thanks so much, Jim.
ZARROLI: You're welcome.