Investors fled the US and European stockmarkets in a sell-off triggered by a wave of increasing alarm over the global economic outlook.
The Dow Jones Industrial Average fell 268.22 points, or 2.7 per cent, to finish at 9870.30. The Standard & Poor's 500 Index dropped 33.33 points, or 3.1 per cent, to close at 1041.24. The Nasdaq Composite Index slid 85.47 points, or 3.85 per cent, to end at 2135.18.
All but one stock in the S&P 500 ended lower as escalating doubts about the stability of Europe's banks roiled markets once again.
"The day started with overseas - China - that was bad," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "Then it got banged out with the consumer confidence and it all just kind of went from there."
The S&P 500 had tumbled below its 2010 intraday low of 1040.78 during the session, which analysts said could ignite further declines. The index closed at its lowest level since October 30, breaking its closing low for the year at 1050.47 - another bearish signal for markets.
"Everybody is talking about 1040, that it is the do-all, end-all, blow it up, end of the world, blood on the streets level. The market crashes, the S&P goes to 900," said Marc Pado, US market strategist at Cantor Fitzgerald & in San Francisco.
Economically sensitive sectors such as materials, industrials and financials were among the hardest hit.
Boeing slid 6.3 per cent to $US63.04 and Caterpillar shed 5.5 per cent to $US60.85. Diversified manufacturer 3M, which raised its second-quarter sales outlook last night, was not immune to the selling pressure, dipping 0.6 per cent to $US78.49.
Fears about the strength of the banking system surfaced again, with investors worried about a potential liquidity shortfall of more than 100 billion euros in the financial system as European banks repay 442 billion euros in emergency loans on Thursday.
The KBW Bank index fell 4.4 per cent and broke its 200-day moving average today at 48.00, which it had made a stand at last Thursday and Friday.
"The break of the 200-day moving average fueled more selling. Technically, this is another sign of weakness in the financials," said Elliot Spar, option market strategist at Stifel Nicolaus in Shrewsbury, New Jersey.
The CBOE volatility index, known as Wall Street's fear gauge, surged 22 percent to a session high of 35.39, its highest level since early June, in a sign more volatility could be in the offing. [ID:nN29161109]
Earlier in the day, the Conference Board corrected its leading economic index for China to an April gain of 0.3 per cent from a previously reported rise of 1.7 per cent, a sharp revision that undermined confidence in China's ability to sustain strong growth.
The correction prompted investors to turn against riskier assets, adding to a global sell-off. The Shanghai Composite Index fell 4.3 per cent to end at a 14-month low.
US consumer confidence dropped sharply in June, after rising for three months, on worries about the labor market, according to a report from the Conference Board. The news heightened fears of an economic slowdown after a recent spate of weak data from the housing and job markets.
‘‘Already under solid pressure amid the backdrop of lingering euro-area financial market concerns and a steep downward revision in a piece of Chinese economic data, global equity markets have extended losses following a much larger-than-expected drop in US consumer confidence,’’ analysts at Charles Schwab & Co said in a report.
About 11.38 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's estimated daily average of 9.65 billion.
Declining stocks outnumbered advancing ones on the New York Stock Exchange by 2,831 to 259, while on the Nasdaq, there were 2,393 declining stocks and only 279 advancers.
Reuters, AFP
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