US stocks plunge on recession fears

WASHINGTON: US stocks plunged on Thursday, hitting their lowest levels of the year as worries about Europe's sovereign debt problems and the weak US economy stoked fears of a new recession.

At 1645 GMT the Dow Jones Industrial Average was down 2.25 percent, or 267.32 points, at 11,629.12, recovering somewhat after having plummeted more than three percent in late morning trade.

The broader S&P 500 was off 2.44 percent to 1,229.65, while the tech-heavy Nasdaq Composite sank 2.53 percent to 2,625.06.

Events in Europe and disappointing US economic data are contributing to "the fear that the economy is heading for a double-dip recession," said Peter Cardillo, of Rockwell Global Capital.

"The market is pricing that in," he said.

The US Labor Department said early Thursday weekly claims for unemployment benefits remained at a high 400,000 last week, as business and government layoffs persisted while new job creation remained weak.

Meanwhile, markets have been on edge about sovereign debt fears in Italy and Spain, the eurozone's third- and fourth-largest economies, as their borrowing costs surged this week.

All but one of the companies on the Dow's list of 30 blue-chip stocks were hit by the sell-off on Thursday.

The exception was Kraft, which was up 2.7 percent after unveiling plans to split itself into two companies, one for its US grocery business and the other for its global snacks portfolio.

The hardest-hit companies on the Dow included aluminum giant Alcoa, down 4.1 percent; Bank of America, down 3.9 percent; and oil major Chevron, which fell 4.0 percent as the price of oil plunged to one-month lows.

Caterpillar, the maker of mining and construction equipment whose stock is seen as particularly sensitive to global economic trends, fell 3.8 percent.

"Stocks have retreated deeper into the red to set a new 2011 low. The bleeding continues to be broad-based," said Briefing.com.

Copyright AFP (Agence France-Presse), 2011