Nervous investors turn tail again, sending Dow down 470 points

Investors got another case of the jitters Tuesday, sending U.S. stocks back into correction territory.

Traders attributed the opening sell-off to reports in China showing further declines in its factory sector and exports.

The Institute for Supply Management reported that its manufacturing purchasing managers index dropped to 51.1 in August from 52.7 in July.

A reading above 50 suggests the economy is still expanding, but the August number was lower than expected and indicates that the strong dollar, falling energy prices and slowing growth in China are causing U.S. factories to expand at a slower rate.

“Last week, I detected lots of concern among our institutional accounts that while bear markets are caused by recessions, a flash crash could cause a recession in the global economy that is already looking frail and fragile,” Wall Street economist Ed Yardeni said in a report Tuesday.

The main economic event this week is Friday’s August jobs report and its impact on the Federal Reserve’s decision whether to raise the short-term federal funds rate at its Open Market Committee meeting Sept. 16-17.

Charles Rotblut, a vice president with the American Association of Individual Investors, said it was not surprising to see volatility return to the markets after such a long absence.