U.S. stocks close out their worst month in 3 years

NEW YORK - August was a brutal month for investors.

Fears about a slowdown in China's economy and concerns about when the Federal Reserve will raise interest rates pushed stocks sharply lower this month. While the market recovered much of the ground it lost, the Standard & Poor's 500 index still finished August down 6.3 percent, its worst showing since May 2012.

The selling started midway through the month after China shocked investors by devaluating its currency. The move, an effort to boost China's economy, seemed to have the opposite effect. Global investors interpreted the decision as a sign that China's economy, the second-largest in the world, was growing more slowly than anticipated. That combined with another plunge in Chinese stocks sent off red flags in Asia, Europe and the Americas.

The selling was fierce and deep. Trading volume, which typically slows in summer, spiked. The S&P 500 index at one point fell into what's known as a "correction," which is when an index falls 10 percent or more from a recent high.

On Monday, declines were relatively modest. The Dow Jones industrial average gave up 114.98 points, or 0.7 percent, to close at 16,528.03. The S&P 500 lost 16.69 points, or 0.8 percent, to 1,972.18 and the Nasdaq composite lost 51.82 points, or 1.1 percent, to 4,776.51.

The losses would have been deeper, but oil prices, which were solidly lower earlier in the day, jumped after the U.S. Energy Department cut its estimate for the country's oil production. The news sent energy stocks higher, making energy the only industry in the S&P 500 to close with a gain.

U.S. crude surged $3.98, or nearly 9 percent, to $49.20 a barrel in New York. Brent crude, the international standard, jumped $4.10 to $54.15 a barrel in London.

It wasn't as U.S. markets were in perfect shape before China's spooked them. Investors had recently trudged through a corporate earnings season that delivered only meager profit growth.

Asian markets had another bumpy day. The Shanghai Composite Index fell as much as 2.6 percent, but recovered to close 0.8 percent lower. Hong Kong's Hang Seng also spent most of the day in the red before closing up 0.3 percent. Tokyo's Nikkei 225 lost 1.3 percent.

European stocks also fell. Germany's DAX lost 0.4 percent and France's CAC-40 lost 0.5 percent. U.K.'s markets were closed for a holiday.

U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 2.22 percent from 2.18 percent late Friday. The dollar declined to 121.22 yen from 121.38 yen on Friday. The euro rose to $1.120 from $1.1180.