Stocks Tumble as Traders Pan Grim Data
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Signs that many of the world's biggest economies are weakening crushed traders' sentiment, sending the markets diving deep into negative territory.
Today's Markets
As of 11:45 a.m. ET, the Dow Jones Industrial Average dropped 213 points, or 1.7%, to 12181, the S&P 500 fell 24.9 points, or 1.9%, to 1285 and the Nasdaq Composite sold off by 60.5 points, or 2.1%, to 2767.
The U.S. economy added 69,000 jobs in May, the least in a year, and far less than the 150,000 economists expected. The job growth for April was also revised down to 77,000 from 115,000.Meanwhile, the unemployment rate unexpectedly climbed to 8.2% from 8.1% the month before. Digging into the report, the private sector tacked on 82,000 jobs, far short of the 160,000 expected, while the government shed 13,000 jobs.
"There is virtually nothing positive in this report if you are trying to build a case for an economy that is supposed to be in 'recovery' mode and gaining momentum," Tom Porcelli, chief U.S. economist at RBC Capital Markets wrote in a note to clients.
A report from the Institute for Supply Management showed the expansion in the U.S. manufacturing sector slowing down in May from April. The PMI gauge came in at 53.5 from 54.8. The index was expected to drop to 53.9. A separate report from the Commerce Department showed construction spending rose 0.3% in April on a month-to-month basis, slightly shy of the 0.4% that was expected.
Traders were taking cover in safe-haven assets, such as U.S. Treasury bonds. Indeed, the yield on the 10-year fell 0.082-percentage point to 1.483% -- another record low. Volatility jumped nearly 7% as tracked by the CBOE's VIX.
Every major sector was to the downside, but financials were taking the biggest thrashing. The S&P 500 fell beneath its 200-day moving average, a key technical support level, for the first time since December.
Adding to the gloomy sentiment, the manufacturing sector in the eurozone contracted at the swiftest pace in nearly three years, according to a closely-watched survey by Markit in London.
Of particular concern to many market participants was that Germany, Europe's biggest economy, which has been generally resilient to headwinds from the debt crisis, saw its biggest deterioration in manufacturing since June 2009. That is an indication, analysts say, that the debt debacle is bleeding into core economies. A separate report from Eurostat showed the unemployment rate across the eurozone was steady at 11%, a record high, in April.
"Eurozone manufacturers reported a deepening downturn in May, indicating that the damage to the real economy caused by the region’s financial and political crises continues to spread across the region," Markit chief economist Chris Williamson said in a statement accompanying the report.
China's official gauge of its manufacturing sector deteriorated sharply in May from April. A slowdown for the world's second-biggest economy also failed to inspire confidence among market participants.
The Euro Stoxx 50 dropped 2.3% and Germany's DAX plunged 3.1%.
Commodities markets were sharply lower. The benchmark crude oil contract traded in New York slid $2.61, or 3.1%, to $83.92 a barrel. Wholesale New York Harbor gasoline dropped 1.9% to $2.67 a gallon.
In metals, gold soared $46.50, or 3%, to $1,610 a troy ounce.
Foreign Markets
The Euro Stoxx 50 dropped 2.3%, the English FTSE 100 slid 1.2% to 5258 and the German DAX plunged 3.1% to 6071.
In Asia, the Japanese Nikkei 225 sold off by 1.2% to 8440 and the Chinese Hang Seng dipped 0.38% to 18558.