U.S. equities were hammered in mid-morning trading as investors fretted over the impact of new regulations in China allowing fund managers to short stocks as well as more stringent rules on lending margins.

The concern was that the new regulations would cool the overall market. As a result, the Dow Jones Industrial Average fell over 266 points, or 1.5 percent, to 17,839. The S&P 500 was off 1.1 percent to 2,081 while the Nasdaq shed 1.5 percent to 4,933.

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