Economic Malaise Grips Wall Street; Stocks, Commodities Tumble

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Stocks sustained heavy losses on Thursday amid mounting unease about the stalling world economy and a lack of decisive action from policymakers on quelling the slide.

Today's Markets

As of 3:11 p.m. ET, the Dow Jones Industrial Average dipped 220 points, or 1.7%, to 12604, the S&P 500 slumped 26.6 points, or 2%, to 1329 and the Nasdaq Composite dropped 62.2 points, or 2.1%, to 2868.

With the key Federal Reserve meeting over, market participants are focusing their attention back to the stream of incoming data. Business surveys from major world economies pointed to a loss of momentum.

The manufacturing sector in the mid-Atlantic region contracted much more sharply in June than in May. The Philadelphia Federal Reserve's gauge of manufacturing activity in the mid-Atlantic region came in at -16.6, far short of the zero reading expected. Readings above zero point to expansion, while those below zero indicate contraction. This comes on the heels of disappointing data from Asia and Europe.

The HSBC Flash PMI gauge showed the Chinese manufacturing sector contracting for the eight month in a row. Meanwhile, the manufacturing sector in the eurozone continued shrinking for the fifth-straight month, according to a report from Markit.

Oil markets took a thrashing for the second day in the row amid concerns the weakening manufacturing sector will cut demand for crude oil.

The benchmark crude oil contract traded in New York plunged $3.25, or 4%, to $78.20 a barrel. Wholesale New York Harbor gasoline dropped 1.6% to $2.55 a gallon.

In metals, gold sold off by $50.30, or 3.1%, to $1,567 a troy ounce.

New claims for unemployment benefits fell to 387,000 last week from an upwardly revised 389,000 the week prior, the Labor Department reported. Claims were expected to fall to 380,000 from an initially reported 386,000. The four-week moving average, which helps smooth out volatility in the weekly numbers, however, rose to its highest level since December 2011. The jobs market has been struggling, with weekly and monthly reports broadly pointing to modest growth that has failed to make material changes in the nation's unemployment rate.

Existing home sales fell 1.5% in May to a 4.55-million unit annualized rate, short of the 4.57-million unit rate expected, according to the National Association of Realtors. In a statement on Wednesday, the Fed referred to the housing market as "depressed" and said it represents a factor that is slowing down broader economic growth. High supply, weak demand and stubbornly tight lending markets have all played a role, economists say.

Also on the European front, Spain sold $2.81 billion of medium-term debt on the day, which exceeded the maximum target of $2.53 billion. However, Madrid saw its borrowing costs spike to levels that analysts say would be difficult to finance in the long run.

Foreign Markets 

The Euro Stoxx 50 fell 0.37% to 2199, the English FTSE 100 dipped 0.99% to 5566 and the German DAX slipped 0.77% to 6343.

In Asia, the Japanese Nikkei 225 rose 0.82% to 8824 and the Chinese Hang Seng dropped 1.3% to 19265.