NEW YORK — U.S. stocks were clobbered Thursday, thrusting Wall Street into correction mode, as investors compiled a lengthy list of concerns about the U.S. and global economy.
“We’re just worrying ourselves to death,” said Bruce McCain, chief investment strategist at Key Private Bank. “How do you get out of this roller coaster of the relentless onslaught of bad news?”
The three benchmark stock indexes all lapsed into negative territory for the year; oil dropped sharply on thoughts of reduced global demand; and gold sank as investors cut holdings to cover stock positions. Treasurys and the dollar rallied.
The Dow Jones industrial average dropped 512.76 points, or 4.3 percent, to 11,383.68, with all 30 components losing ground and the index down 1.7 percent for 2011. The index’s point drop was its worst since December 2008 and its percentage drop was the steepest since February 2009 — both low points of the credit and financial crisis.
Those losses were followed earlier this morning by tumbling markets in Asian countries. Japan’s Nikkei 225 stock average slid 3.4 percent to 9,335.26 and Hong Kong’s Hang Seng shed 4.1 percent to 20,989.28. Australia’s S&P/ASX 200 was off 4 percent at 4,107.20, Taiwan’s Taiex sank 4.2 percent to 7,967.38 and Seoul’s Kospi dropped 2.8 percent to 1,961.79.
Off 4.6 percent for the year, the Standard & Poor’s 500 index declined 60.27 points, or 4.8 percent, to 1,200.07, with the natural-resource and energy sectors hit the hardest among its 10 industry groups. It was the worst percentage loss since February 2009.
Down 3.6 percent for the year, the Nasdaq composite index shed 136.68 points, or 5.1 percent, to 2,556.39, its worst percentage loss since January 2009.
All three indexes are now at least 10 percent from their bull-market closing highs, translating to what many analysts consider a correction.
“There’s a lot of uncertainty here,” said Howard Silverblatt, senior index analyst at Standard & Poor’s, who listed as an emerging concern the idea that corporations might have to scale back expectations for the third quarter.
“If the Street numbers are too high, with the third quarter projected at record levels, if that has to be taken down at the last minute, the last remaining support beam is being pulled away,” said Silverblatt.
One market strategist said both the Main Street and Wall Street are suffering from crisis fatigue after “two weeks of Washington putting us over the edge” before reaching a deal to raise the federal debt limit.
The economic concerns are new only in that Wall Street had been fixated on the debt battle in Washington, and once the threat of a government default was no longer an issue, “it’s back to basics, and that’s the economy,” said Silverblatt.
European stocks also fell sharply on worries that Italy or Spain might require help from the European Union.
“The one thing this perhaps does do, it effectively dispels the myth that the U.S. could achieve a self-sustaining recovery all on its own. Longer term, we’re going to have to be a lot more careful monitoring what is going on in Europe and emerging markets,” McCain, said noting the implications for U.S. exports.
Investors also digested a slate of recent central bank moves that highlighted the tough road facing some of the world’s biggest economies. The European Central Bank resumed bond purchases in a bid to keep the region’s debt crisis from expanding, hours after the Bank of Japan expanded its asset-purchase program and Japanese monetary authorities intervened to depress the yen.
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