Stocks plunge as Wall Street correction gathers momentum

Stocks on Wall Street tumbled sharply as the first correction of the bull market that began in March 2009 took a strong grip on the market.Industrial and materials stocks led the decline, while oil futures plummeted as worries mounted that Europe's debt woes and a possible slowing of growth in China will sap global demand.Assets ranging from the Australian dollar to metals futures sank as investors shed riskier holdings in favour of safer bets such as US Treasurys.

Stocks on Wall Street tumbled sharply as the first correction of the bull market that began in March 2009 took a strong grip on the market.

Industrial and materials stocks led the decline, while oil futures plummeted as worries mounted that Europe's debt woes and a possible slowing of growth in China will sap global demand.

Assets ranging from the Australian dollar to metals futures sank as investors shed riskier holdings in favour of safer bets such as US Treasurys.

The Dow Jones Industrial Average closed 376.36 points, or 3.6%, down at 10,068.01, off 10.2% from its 2010 high.

The S&P 500 index dropped 3.9%, to 1091.59, down 12% on its 2010 high. Both indexes fell well below their 200-day moving averages, at 10,258 and 1102, respectively.

The S&P 500's slide through 1100 was a key psychological move that fueled more selling. The Nasdaq Composite was down 4.1% at 2204.01, a 12.9% fall for 2010.

Sectors with the greatest global exposure posted the biggest drops, led by the materials and industrial sectors as investors worried that international demand might decline.

The Dow's leading decliners included Alcoa, which dropped 5.4%, Caterpillar, which fell 4%, and Boeing, which slid 4.4%. Financials also weakened on new trading restrictions in Europe and the US Senate's debate over financial legislation.

Other markets: Europe, Asia down

European markets dropped sharply as sentiment continued to be hit by concerns about the continent's debt crisis. The worries left most of the world's leading indexes now trading below where they started 2010.

In the UK, the FTSE 100 index was down 101.74 points, or 2%, at 5056.34 while Germany's DAX slid 140.31 points, or 2.3%, to 5848.36. The CAC-40 Index in France was 102.60 points, or 2.9%, lower at 3409.07.

Several Asian stock markets closed at their lowest levels in months. Japan's Nikkei Stock Average fell 1.5% to 10,030.3 and Taiwan's Taiex sank 1.8% to 7424.43, with both benchmarks ending at their weakest levels in more than three months.

The Nikkei briefly fell below the 10,000-point level during the session. China's Shanghai Composite dropped 1.2% to close at 2555.94, its lowest in more than a year.

Australia's S&P/ASX 200 gave up 1.6% to finish at 4316.4, its lowest level since August.

Commodities: Oil, gold down

Crude oil futures plunged to their lowest point since July, slammed by concerns about an oil glut in the US Midwest and the possibility of a European economic slowdown.

In thin trading, the expiring contract for light, sweet crude for June delivery traded as low as $US64.24 a barrel in New York, an 8% drop.

The most-active July contract fell to $US68.85 a barrel, a 5% drop. Brent crude on the ICE futures exchange was down 4% at $US70.74 a barrel.

Gold futures fell as institutional investors exited amid general market volatility and some of the recent safe-haven demand abated.

Traders used a decline in the price to a two-week low as a buying opportunity, analysts said, allowing prices to rise from their lowest levels.

Gold for June delivery in New York was down $US9.60, or 0.8%, to $US1183.50 an ounce.

Currencies: Dollar, yen up

Worry that the euro-zone crisis will stymie the global recovery sent the commodity-backed bloc of currencies sharply lower, with the Australian dollar plummeting nearly 3% against the greenback and the Canadian dollar dropping more than 2%.

The euro fell sharply against the yen, dropping to a nine-and-a-half-year low under ¥110, before rebounding modestly as US stocks pared some of their losses.

The euro dipped below $US1.23 before it bounced back to trade only slightly off day-earlier levels against the greenback.

The dollar and yen gained most from souring investor sentiment, with investors strongly favouring the perceived safe harbours over currencies considered riskier.

The euro was at $US1.2366 from $US1.2385. The dollar was at ¥90.03 from ¥91.52, while the euro was at ¥111.30 from ¥113.41. The UK pound was at $US1.4341 from $US1.4412.

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