ROBERT SIEGEL, HOST:
Late summer is supposed to be slow and boring on Wall Street. Today was anything but. It was brutal. The Dow Jones Industrial Average fell more than 3 percent, finishing its worst week since 2011. Markets in Asia and Europe also plummeted this week. All of this follows China's decision to devalue its currency, which was taken as evidence that that country's economy is losing momentum. NPR's Jim Zarroli joins me now. And, Jim, stocks were down the entire week. Today, things got even worse. What happened?
JIM ZARROLI, BYLINE: Yeah, it was bloody. I mean, it was - the day started out bad. It only got worse. This was actually the biggest one-day drop since November 2011. The market is now in what we call correction territory. The Dow has fallen more than 10 percent from its all-time high, which was just on May 19. And stocks were down everywhere - Japan, Hong Kong, London, Frankfurt. They were down everywhere.
SIEGEL: How much of this is attributed to the decision by China's central bank that I mentioned - the decision to devalue?
ZARROLI: You know, I think it's safe to say that there are a lot of doubts right now about how strong the Chinese economy really is. I mean, we are used to thinking of China as this big growth success story. And it still is that, but the growth has been slowing. And China's government doesn't really seem like it knows what to do about it. It goes from one policy to another and none of these seem to be really effective. And then meanwhile, there are all these disturbing signs that things might actually be worse than we thought they were. I mean, today for instance, there was another report that the manufacturing sector in China is weaker than expected. So it gets investors worried.
SIEGEL: Well, how is the devaluation of the currency in China meant to address those concerns?
ZARROLI: I - well, I think one of the things that China was looking for, I think it was hoping to make its products more competitive, which means more of its factories will operate, more people are employed. The problem is that this hurts manufacturers in other countries. It hurts the United States' manufacturers, but also those in a lot of Asian countries like South Korea and Thailand and Indonesia. China is a much bigger part of, you know, proportionately to their economy than it is to ours. And they're tempted to devalue their own currencies, too, so their products stay cheap.
We saw this in Kazakhstan. We saw this in Vietnam over the past few days, and others are going to follow because the thing is it isn't just China that is seeing a slowdown. A lot of other big countries are worried about growth, including some really big ones, like Russia and Brazil. I mean, compared to the rest of the world, the United States is still actually doing OK.
SIEGEL: Well - but if the slowdown that you describe is so widespread and happening in so many countries, how worried should investors be over a week like this one?
ZARROLI: Well, you know, the market has fallen a lot right now. I think you would say it's been a rout. It's lost a lot of ground. But you have to say that that does happen sometimes. And it's important to remember that, you know, for the most part, the stock market has done really well in recent years. If you put money in it in, you know, five years ago, you would've made a lot of money over time.
And the other thing is, you know, there are silver linings to this, and one of them has to do with oil prices, you know, because there's all this fear about where the global economy is going and what's going to happen with Russia and what's going to happen with China. We've see oil prices falling quite a bit. They've actually dipped below $40 a barrel today, which is a really sizable fall from where they were. You know, and if you're in the oil business, that's not good. You're going to lose money, but for the rest of us, it's very good. It means lower gasoline prices. It means lower energy prices and lower, you know, could extend to things like airplane tickets.
SIEGEL: OK, Jim, thank you.
ZARROLI: You're welcome.
SIEGEL: That's NPR's Jim Zarroli talking about what drove today's big stock market losses. Transcript provided by NPR, Copyright NPR.
