Dow slumps to worst August since 2001

US stocks slumped to their worst August in nine years, as investors retreated on fears for the US economy.

The Dow Jones Industrial Average ended the month down 4.3%, the worst since May, and first down August for the index in five years, the Wall Street Journal reports.

It was worse for the broader Standard & Poor's 500, which fell 4.7%. The tech-heavy Nasdaq shed 6.2%. In what paints a gloomy picture for the US economy, the Russell 2000 small-cap index recorded its worst August in 12 years, down 7.5%.

The Dow had climbed 7.1% in July, but retreated in August on fears over a double dip recession and on deflation.

August is traditionally a good month for equities, while September has been historically more challenging for the stock market.

The blue-chip index's largest fallers came from the tech sector - with Intel, Cisco Systems and Hewlett-Packard each down more than 13%.