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Stocks slide after weak manufacturing reports

Associated Press
FILE - In this Wednesday, June 20, 2012, file photo, Federal Reserve chairman Ben Bernanke is visible on a television monitor on the floor of the New York Stock Exchange. Futures augured a weak start Thursday June 21, 2012 on Wall Street with Dow futures nearly unchanged at 12,765. S&P 500 futures dropped 0.5 percent to 1,343.50.  (AP Photo/Richard Drew, File)
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FILE - In this Wednesday, June 20, 2012, file photo, Federal Reserve chairman Ben Bernanke is visible on a television monitor on the floor of the New York Stock Exchange. Futures augured a weak start Thursday June 21, 2012 on Wall Street with Dow futures nearly unchanged at 12,765. S&P 500 futures dropped 0.5 percent to 1,343.50. (AP Photo/Richard Drew, File)

NEW YORK (AP) — A batch of weak economic reports sent stocks sharply lower Thursday. The worst of the bunch was a regional manufacturing index that sank for the second straight month.

The Philadelphia branch of the Federal Reserve reported that manufacturing in the Northeastern U.S. slumped this month, pulled down by drops in new orders and shipments. Economists had expected no change in the index. It was the worst reading since last August.

The Dow Jones industrial average plunged 182 points, or 1.5 percent, to 12,642 as of 1:45 p.m. Aluminum maker Alcoa led the Dow lower, falling 3.7 percent. Alcoa's stock lost 32 cents to $8.60.

The Standard & Poor's 500 index lost 22 points to 1,333, a decline of 1.7 percent. The drop in the two stock indexes wiped out their gains for the week.

"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."

In China, a gauge of manufacturing sank in June, pulled down by weaker orders for goods. A similar survey for countries that use the European currency also showed a contraction. The reports helped sink commodity prices. Copper and platinum fell 2 percent. The price of oil dipped below $80 for the first time since October.

Benchmark U.S. crude, on a steady slide since May, hit a low of $79.82 per barrel in morning trading.

The Nasdaq composite fell 55 points, 1.9 percent, to 2,875.

The Philadelphia Fed index pushed Treasury prices up and yields down as traders shifted money into the their favorite hiding spot. The yield on the 10-year note slipped to 1.61 percent, down from 1.63 percent late Wednesday.

Material and energy companies, whose fortunes are closely tied to economic swings, led eight of the 10 industry groups within the S&P 500 index lower. Utilities and telecommunication companies, which are considered defensive investments because of their reliable cash flows and rich dividends, edged higher.

The market got off to a weak start after the Labor Department reported a small drop in the number of people applying for unemployment benefits. Figures for the previous week were revised higher. Those are bad signs for the job market because they indicate that companies are still laying off workers.

A report on the housing market offered little help. The National Association of Realtors said Thursday that sales of previously occupied homes dropped 1.5 percent in May from the previous month.

In Europe, auditors calculated that Spain's troubled banks need as much as €62 billion ($78.76 billion). A Bank of Spain official said this scenario was much less than the €100 billion that the 17 countries in the euro currency union said they would provide for Spain's banking sector.

Among stocks making big moves:

— ConAgra Foods, a major food maker whose brands include Hebrew National and Chef Boyardee, gained 4 percent, leading the S&P 500. The company's adjusted earnings and sales topped Wall Street's expectations. The stock climbed 95 cents to $25.55.

— Bed Bath & Beyond plunged 15 percent, the most in the S&P 500. The retailer said it expects weaker earnings in the current quarter than analysts expected even though it reported better profits after the market closed Wednesday. Bed Bath & Beyond's stock lost $11.23 to $62.44.

— Red Hat slumped 5 percent. The largest provider of the Linux open source operating system for computers reported weak figures for deferred revenue. Red Hat's stock dropped $3.19 to $53.29.

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