Shaky economies and currencies in emerging markets are fueling a global sell-off in stocks.
Fearful investors on Monday pushed prices lower across Asia and Europe, though the drops weren't as steep as last week. In the U.S. and in other rich countries, where economies are healthier, investors are also in retreat, but the selling is not as fierce.
Solid corporate earnings are offsetting fears of a slowing Chinese economy and the ripple effects of reduced stimulus from the Federal Reserve. The Dow Jones industrial average, for example, has fallen 5 percent over the past three days, less than the 8.4 percent drop in Argentina's Merval index.
KEEPING SCORE: The Dow rose 48 points, or 0.3 percent, at 15,928, lifted by a big jump in Caterpillar's fourth-quarter earnings. The Standard & Poor's 500 index rose two points, or 0.1 percent, to 1,792.
After surging in 2013, both indexes had their worst losses last week since 2012. That has stoked fear that they could be heading for a correction, or a fall of 10 percent or more from a peak. U.S. stocks have not had a correction since October 2011.
The Nasdaq composite on Monday was down 16 points, or 0.4 percent, to 4,111.
OVERSEAS ANGST: Most major European stock markets were lower. Germany's DAX fell 0.5 percent and France's CAC-40 declined 0.4 percent. Spain's benchmark index fell 1 percent. In Asia, the Hang Seng in Hong Kong and the Nikkei in Tokyo each fell more than 2 percent.
Stocks in emerging markets fell, again. The widely followed MSCI Emerging Markets ETF was down 0.7 percent. It has fallen 10 percent so far in 2014 after a nearly 6 percent loss last year.
THE BACKGROUND: The turbulence in emerging markets has been driven partly by signs of an economic slowdown in China, which is a major importer of commodities from other developing countries. But problems elsewhere are playing a role, too.
In Argentina, where inflation is running as high as 30 percent, the peso has collapsed and the government is running short of U.S. dollar reserves it could use to buy its currency and prop it up. In South Africa, a strike by tens of thousands of platinum miners is raising the specter of violence in the streets. And in Turkey, a corruption scandal has destabilized the government and scared investors into selling the currency, the lira.
HOPEFUL SIGNS: Investors were encouraged by a recovery in Turkey's battered currency Monday. The lira hit a record low of 2.39 per dollar early in the day before recovering to 2.29 per dollar after the country's central bank said it would hold an emergency policy meeting on Tuesday.
Other emerging market currencies continued to weaken against the dollar. The South African rand fell another 0.6 percent to 11.16 per dollar, and Russia's ruble fell 0.6 percent to 34.72 per dollar.
In Argentina, the government eased currency controls, announcing Argentines can buy up $2,000 per month. The Argentine peso has fallen the most against the dollar in 12 years.
EARNINGS SURPRISES: Caterpillar was the biggest gainer in the Dow, rising $4.83, or nearly 6 percent, to $91 after the earth-moving equipment maker reported fourth-quarter net income that easily beat analyst estimates. Several companies report results after the market closes Monday, including Apple, Zions Bancorp and Seagate Technology.
THE QUOTE: "Earnings numbers are coming in good, but sales are weak and macroeconomic numbers are lower than expected -- new home sales, payroll, industrial production," said Steven Ricchiuto, chief economist at Mizuho Securities. "We're overdue for a correction."
REDUCED FED BOOST: The Fed scaled back its stimulus for the U.S. economy last month as signs of growing economic strength emerged. It reduced its monthly bond purchases to $75 billion from $85 billion. The dialing back of easy-money policies has hit some emerging markets hard. When the Fed was pushing U.S. rates lower, emerging markets saw capital flowing in from investors hunting for bigger returns than they could get in the United States. Now investment is flowing back to America, and hammering currencies in emerging markets. The Fed meets again Tuesday and Wednesday, and many economists expect the central bank to cut its stimulus further.
AVOIDING RISK: Small-company stocks fell more than the rest of the market, a signal that investors were dumping assets seen as risky. The Russell 2000 index gave up 13 points, or 1 percent, to 1,131. Power and phone companies rose. Investors buy these "defensive" stocks when they want to play it safe and collect a rich dividend.