POSTED: 11:28 a.m. HST, Jun 21, 2012
NEW YORK >> Investors yanked money out of stocks today after new reports from the U.S. and China pointed to a sharp slowdown in manufacturing.
The Dow Jones industrial plunged 251 points, the second-biggest drop this year.
Losses in energy and materials companies led a widespread rout on the stock market. The Dow started sinking after 10 a.m., when the Philadelphia branch of the Federal Reserve reported a sharp contraction in manufacturing in the Northeast. The losses accelerated throughout the day.
“The news has been horrible out there,” said Uri Landesman, president of Platinum Partners. “The U.S. economy is slowing down. And China’s growth is definitely under question.”
The bad news kept piling up as the day went on. Mining and other companies that made basic materials fell hard after prices for commodities such as copper and oil dropped. Goldman Sachs analysts advised their clients to bet that stocks would fall, and speculation swirled that Moody’s would cut the credit ratings of 17 banks.
The Dow lost 250.82 points to close at 12,573.57, a drop of 2 percent. A new report that manufacturing slowed in China was troubling since that country’s economy has helped drive global economic growth over the past four years. China is a major importer of copper and other basic materials.
The Standard & Poor’s 500 index lost 30.18 points to 1,325.51, a decline of 2.2 percent. The Nasdaq composite fell 71.36 points, 2.4 percent, to 2,859.09. All three indexes lost their gains for the week.