China's selloff spills over to U.S. markets

A selloff in U.S. stocks picked up steam late Friday morning, following a volatile trading session in Asian markets that ended with the Shanghai Composite down more than 5%.

The Dow Jones industrial average (INDU) fell 85 points, or 0.8%, and the S&P 500 (SPX) lost 13 points, or 1%. The tech-heavy Nasdaq (COMP) decreased 27 points, or 1%.
G-20 leaders finished up their meeting in Seoul, South Korea, without any comprehensive plan to combat global economic woes. But they did agree to address "persistently large imbalances" next year.

"We know there are imbalances and we know this tension is behind them," said Philip Isherwood, equities strategist at Evolution Securities."The imbalances ... are adding to the political tension."

Those tensions come as worries about the global economy rear their ugly head. Ongoing concerns about a Europeans sovereign debt crisis, potential tightening of China's monetary policy, and tepid U.S. growth continues to keep investors on edge.

"Investors are readjusting their perspectives slightly after the election, earnings season and the Fed's quantitative easing announcement," said Karl Mills, president and chief investment officer at Jurika Mills & Keifer. "The market became too complacent about sovereign debt issues and now we're being reminded of that again, with Ireland being the biggest problem child."

As global economic concerns took center stage this week, markets began to retreat. Stocks have been on the decline for most of the week, with the Dow and the S&P posting losses for four out of the last five days.

All three major indexes sank Thursday, a day after Cisco Systems (CSCO, Fortune 500) issued a sales forecast that disappointed many investors. The network equipment maker is seen as a bellwether for demand across the technology sector.

If markets continue at this pace, stocks are on track to log the biggest weekly drop in three months -- dropping about 2%.