US stocks down sharply in morning trading, extending losses; Dow heads for 4th straight loss

U.S. stocks tumbled in morning trading Wednesday as investor fears of a global economic slowdown intensified, setting the Dow Jones industrial average on course for its fourth consecutive loss.

The Dow plunged as much as 369 points in the first 10 minutes of trading, following steep declines in Europe, as the market sized up a batch of discouraging data on retail sales and manufacturing.

The Dow recovered much of the ground it had lost in the first half-hour of trading. By 11:12 a.m. Eastern time it was down 182 points, or 1.1 per cent, to 16,134.

The Standard & Poor’s 500 index fell 21 points, or 1.1 per cent, to 1,856. The Nasdaq composite dropped 40 points, or about 1 per cent, to 4,187.

Bond prices soared as investors shifted money into safe-haven investments.

Early on, the yield on the 10-year Treasury note plunged to 1.91 per cent from 2.20 per cent the day before, or 29 basis points, a huge move. It recovered to 2.06 per cent in midmorning trading. Bond yields fall when their prices rise.

“It typically takes weeks for 10-year Treasurys to move 29 basis points,” noted Tom Di Galoma, head of fixed income rates in New York at ED&F Man Capital. “Today it moved 25 basis points in 5 minutes.”

Stocks have been declining for nearly a month as investors worry that economies in Europe and Asia are slowing. The Dow is now down 2.7 per cent for the year, while the S&P 500 index and Nasdaq are barely in the green for 2014.

All 10 sectors in the S&P 500 declined, led by financial stocks. Bank of America fell 62 cents, or 3.8 per cent, to $15.91.

The Commerce Department reported that retail sales declined 0.3 per cent in September from the previous month as purchases of autos, gasoline, furniture and clothing slowed. Retail sales have risen 4.3 per cent over the past 12 months, slightly below their historical pace.

A snapshot of manufacturing activity wasn’t encouraging either.

The Federal Reserve Bank of New York’s Empire State Manufacturing index fell 6.2 per cent in October as new orders shrank and shipments barely rose. The latest reading marks the slowest pace of growth in six months.

In overseas market action, traders worried that Europe might relapse into recession.

France’s CAC 40 sank 2.8 per cent and Germany’s DAX lost 2.3 per cent. Britain’s FTSE 100 fell 2.3 per cent. Greece’s stock index plunged 6.3 per cent on concerns that the Greek government could collapse next year, putting its bailout program in danger. The index fell 5.7 per cent the previous day.

In Asia, Japan’s Nikkei 225 stock average closed up 0.9 per cent, while Hong Kong’s Hang Seng added 0.4 per cent. China’s Shanghai Composite rose 0.6 per cent and Seoul’s Kospi fell 0.2 per cent after the central bank cut its growth forecasts for this year and next. Markets in Southeast Asia, Australia and New Zealand were higher.

U.S. crude fell 52 cents to $81.33 a barrel.