While you were sleeping: Stocks, US dollar slide

Wall Street dropped after reports showed declines in US retail sales and producer prices, fuelling concern about the impact of the slowdown in the global economy and the effect on corporate profits.

In afternoon trading in New York, the Dow Jones Industrial Average plunged 2.7 percent, the Standard & Poor's 500 Index sank 2.9 percent, while the Nasdaq Composite Index slumped 2.5 percent.

By 8am NZ time, the Dow had recovered somewhat to be down 1.7%, with the Nasdaq down 1.2% and the S&P 500 down 1.6%.

Slides in shares of Intel and those of JPMorgan, both down 5.7 percent, propelled the Dow's decline in afternoon trading.

A Commerce Department report showed retail sales fell more than expected last month, declining 0.3 percent, after a 0.6 percent increase in August.

"Consumers have turned more cautious," Ted Wieseman, an economist at Morgan Stanley in New York, who cut his third-quarter GDP growth forecast to 3.1 percent from 3.4 percent on the figures, told Reuters.

Separately, the New York Fed's Empire State business conditions index plunged more than expected to 6.17 in October, down from 27.54 in September, while a Labor Department report showed producer prices unexpectedly fell in September, sliding 0.1 percent for the first drop in more than a year.

"The clincher is that some of the concerns about Europe and the other economies slowing down has reached our shores today with the retail sales number and the PPI number," Scott Armiger, portfolio manager at Christiana Trust in Greenville, Delaware, told Reuters.

The Chicago Board Options Exchange Volatility Index, considered investors' fear gauge, soared 30 percent to 29.70. Earlier in the session it touched the highest level since 2011.

The US dollar also weakened, sliding 1.2 percent against the yen, and 1 percent against the euro.

Meanwhile, about US$623 billion in US government debt changed hands by 12 pm New York time, Bloomberg News reported, citing ICAP. That's just below the record US$662.2 billion traded on May 22, 2013, when former Fed Chairman Ben Bernanke mentioned the possibility of slowing bond purchases.

"The market has been forced to wake up fast as we are getting capitulation to the broader global forces," Larry Milstein, managing director in New York of government-debt trading at RW Pressprich & Co, told Bloomberg.

"The Fed is data dependent," Milstein said. "Europe is very weak and the US is starting to show weakness, and the market is taking notice, pushing the timing of tightening back, until there is a reason not to."

Europe's Stoxx 600 finished the session with a 3.2 percent drop from the previous close. The UK's FTSE 100 Index slid 2.8 percent, Germany's DAX shed 2.9 percent, while France's CAC 40 declined 3.6 percent.

US-listed shares of Shire plummeted, last down 31.7 percent, after AbbVie said it was reconsidering its US$55 billion takeover of Shire after the US government recently announced new rules aimed at deals designed to lower tax. AbbVie shares last traded 1.4 percent lower.

(BusinessDesk)