Dow tumbles 251 points: market shaken by second worst trading day of the year

June 21, 2012 – ECONOMY - Global growth worries slammed stocks, triggering a bearish recommendation from Goldman Sachs that accelerated declines and helped drive major benchmarks to their second-biggest losses of the year. The Dow Jones Industrial Average dropped 250.82 points, or 2%, to 12573.57, while Standard & Poor’s 500-stock index fell 30.18 points, or 2.2%, to 1325.51. The Nasdaq Composite shed 71.36 points, or 2.4%, to 2859.09, pacing to snap a five-session streak of gains. The Dow inched higher at the open, but quickly turned red after Mid-Atlantic manufacturers said that business conditions deteriorated sharply this month, according to the Federal Reserve Bank of Philadelphia. Another sour reading from the jobs market also weighed. The number of Americans filing for jobless benefits fell slightly last week, though the prior week’s figure was revised higher, indicating the labor market is sputtering. “What we’re seeing is the job market slowing to a crawl,” said Saira Malik, head of global equity research for TIAA-CREF in San Francisco. Stocks slid to session lows after analysts at Goldman Sachs recommended that clients set up short positions in the S&P 500. The analysts set a short target for the benchmark index at 1285, or more than 5% lower than Thursday’s close, writing that Thursday’s soft U.S. reports “provides further evidence that weakness has extended into June.” Short sellers borrow shares from other investors and sell them in the hope of buying them back at a lower price later. Traders also cited rumors that the tab for Spain’s bank bailout may be higher than previously reported. Energy and materials stocks led all 10 of the S&P 500′s sectors lower after reports showed that business activity in the euro zone and manufacturing activity in China each contracted in June. Additionally, traders cited lingering disappointment that the Federal Reserve held off on announcing more aggressive stimulus measures on Wednesday. -WSJ

Posted in: