US stocks fall as Chinese markets crash

US stocks tumbled in early trading on Monday, reacting to a massive fall in Chinese stocks.

The Dow Jones industrial average plunged over 1,000 points in early trading and the Standard & Poor's 500 index slumped into "correction territory", Wall Street jargon for a drop of 10 per cent or more from a recent peak.

Treasuries were up as investors turned to less risky investment options.

Markets around the world had already been buffeted by a slowdown in China on Friday, pushing US stock market sharply lower.

A big sell-off in Chinese stock yesterday continued the rout.

The Dow was 668 points, or 4.1 per cent, lower as of 9:57 a.m. Eastern time. The Standard & Poor's 500 index plunged 81 points, or 4.2 per cent, to 1,889, while the Nasdaq composite fell 211 points, or 4.4 per cent, to 4,496 points.

China's main index sank 8.5 per cent as fears grew over the health of the Chinese economy.

Oil prices, commodities and the currencies of many developing countries took a fall over concerns that a sharp slowdown in China might hurt economic growth around the globe.

Wall Street had stayed in a narrow range for most of 2015, but volatility increased this month as China's faltering economy sent investors scurrying for safety.

A number of investors unloaded stocks ahead of the close after looking to benefit from volatility in the markets.

"If things don't settle down in China, we could have another ugly open tomorrow and you wouldn't want to be caught holding positions you bought this morning," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Reuters reported.

In an unusual move Apple chief Tim Cook, in comments to CNBS, reassured shareholders about the iPhone maker's business in China ahead of a dramatic 13-per cent drop and rebound in its stock, which retreated just 2.47 per cent at $103.15.