Stocks end day sharply down as economic fears are revived
The Dow Jones industrial average finished the day down 419.10 points, or 3.7%, to 10991.11 after falling more than 500 points in early trading. The broader Standard & Poor’s 500 fell 4.5%.
Investors scrambled into Treasury bonds, with the yield on the 10-year Treasury note falling at some points below the formerly unimaginable level of 2%.
The U.S. market opened lower after European stocks suffered a rout overnight, skidding as much as 6% on concerns that the continent’s banks could have trouble financing their operations, a potential replay of the credit crunch that struck American institutions in the 2008 financial crisis.
Leading indexes ended the day down 4.5% in England and 5.8% in Germany.
"The markets are adjusting to the reality of the fact that the global economy is not strong," said Steve Ricchiuto, the chief economist at Mizuho Securities.
Stocks in the U.S. had stabilized in the past week, after plunging sharply early this month following the downgrade of Treasury debt by Standard & Poor’s Corp.
In addition to the European sell-off, U.S. traders were hit by a variety of bad economic news as they arrived at their desks Thursday morning.
First-time jobless claims rose a more-than-expected 408,000 last week. Consumer prices jumped 0.5% in June from May, more than double the 0.2% increase economists had estimated. Core inflation, which excludes volatile food and energy prices, rose 0.2%.
Traders also were spooked by Morgan Stanley's lowering of its forecast for global growth.
-- Walter Hamilton and Nathaniel Popper
Photo: Brendan McDermid / Reuters