Wall Street sinks

US stocks dropped on Thursday, driving the Dow and the S&P 500 down more than 3 percent and pushing the Nasdaq down wore than 4 percent, on growing fears that the eurozone's handling of its sovereign debt crisis could jeopardise the global economic recovery.
The Dow Jones industrial average fell 376.36 points, or 3.61 percent, to end unofficially at 10,068.01. The Standard & Poor's 500 Index slid 43.46 points, or 3.90 percent, to close unofficially at 1,071.59. The Nasdaq Composite Index tumbled 94.36 points, or 4.11 percent, to finish unofficially at 2,204.01. Stocks, oil and euro slip as fiscal tightening sparks rout
NEW YORK: Global stocks and commodities sold off on Thursday, knocking US stocks down 10 percent from this year's highs in April, on worries that fiscal tightening is on the rise and will snuff the world's nascent recovery. US oil prices suffered their biggest one-day loss in 13 months while US government debt prices soared as investors sold liquid assets and snapped up safe-havens such as bonds.
The 10 percent slide in the benchmark Standard & Poor's 500 Index from April highs is the most significant break in the rally off of 12-year lows that stocks fell to in March 2009. The sell-off initially was driven by fear that Europe's debt crisis would hobble economic growth and then accelerated on signs that governments need to rein in deficit spending.
Fiscal tightening in debt-strapped developed countries will slow growth and lower inflation across the world, which is increasing selling pressure in financial markets, said Bill Gross, co-chief investment officer at Pimco. The International Monetary Fund on Wednesday pressed Japan to begin a "credible" fiscal program which includes a 5 percent sales tax increase. French President Nicolas Sarkozy proposed deficit "targets" for France.
The belt-tightening sparked investors' fears while an unexpected jump in new US jobless claims underscored the apprehension. Volatility reigned as a sense of instability unleashed panicky selling across markets. "Uncertainty has people stampeding for the exits," said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.
Fears that other eurozone countries will follow Germany's move on Tuesday to ban short selling in some stocks and bonds helped propel a widespread aversion to risk. Germany said restoring confidence in the euro was its "top priority," while a Federal Reserve official said Europe's debt crisis poses a "potentially serious" risk to the US recovery as it threatens global credit markets and commerce.
The euro on Thursday fell to its lowest against the yen since November 2001 as investors fretted about a seeming lack of unity among eurozone leaders in addressing the region's debt crisis. The dollar was down around 1.9 percent against the yen at 89.88 yen.
The dollar was down against a basket of major currencies, with the US Dollar Index down 1.08 percent at 85.456. The euro was up 1.28 percent at $1.2586, and against the yen, the dollar was down 1.47 percent at 90.28. Market volatility was high. Traders pointed to purchases of 10-year Treasury notes by an Asian buyer and to a huge seller of e-minis, a futures contract providing holders exposure to the benchmark Standard & Poor's 500 Index.
The Chicago Board Options Exchange Volatility index, often referred to as Wall Street's fear gauge, rose as much as 28 percent to its highest since April 2009. The benchmark 10-year US Treasury note was up 25/32 in price to yield 3.28 percent. The Reuters-Jefferies CRB index, a global benchmark for commodities, at one point slumped to 8-1/2 month lows.
US light sweet crude oil fell $1.86 to $68.28 a barrel. The expiring June contract for oil on the New York Mercantile Exchange tumbled more than 8 percent to a nine-month low as remaining open interests were either rolled to July or sold, in an effort to avoid physical delivery. The contract has fallen 26 percent since hitting a 19-month high of $87.15 on May 3.
"Oil prices are sliding on liquidations ahead of the June contract's expiration and as we have a glut of oil in the Cushing, Oklahoma, delivery point," said Phil Flynn, analyst at PFGBest Research in Chicago. Spot gold prices fell $5.45 to $1185.30 an ounce. Worries over the eurozone hammered Asian stocks, driving MSCI's index of Asia-Pacific shares outside of Japan down 2.4 percent to an eight-month low.