Wall St plunges in worst selloff in two years

NEW YORK, (Reuters) – Investors fled Wall Street in  the worst stock-market selloff since the depths of the Great  Recession in early 2009 in what has turned into a full-fledged  correction.
The Dow and the S&P tumbled more than 4 percent today  and the Nasdaq lost 5 percent on fear the United States is  staring at another recession and that Europe’s sovereign debt  crisis is swallowing two of its largest economies.
Analysts predicted further losses even though stocks have  fallen on nine of the last 10 days. Two-year Treasury yields  fell to a record low as investors sought safety in short-term  government bonds.
“People are throwing in the towel because they can’t find  relief on any front,” said Milton Ezrati, market strategist at  Lord Abbett Co. in Jersey City, New Jersey, which manages $110  billion in assets.
The S&P 500’s drop puts it more than 10 percent below its  April 29 high, considered a correction. More than 13 billion  shares changed hands, the busiest trading day in more than a  year. Decliners beat advancers on the New York Stock Exchange  by about 19 to 1.
The market’s recent malaise stems from a number of factors.  U.S. economic data has worsened, suggesting slowing growth from  already sluggish pace in the first half. Europe’s sovereign  debt crisis has defied remedies and threatens to engulf large  euro-zone economies Spain and Italy.
“The debt troubles in Europe, especially with the yields on  Italian and Spanish government bonds soaring, are making  investors gather as much liquidity as possible,” said Stephen  Massocca, managing director of Wedbush Morgan in San  Francisco.
The Dow Jones industrial average was down 512.46 points, or  4.31 percent, at 11,383.98. The Standard & Poor’s 500 Index  fell 60.21 points, or 4.78 percent, at 1,200.13. The Nasdaq  Composite Index lost 136.68 points, or 5.08 percent, at  2,556.39.
Some 13.8 billion shares changed hands on the New York  Stock Exchange, NYSE Amex and Nasdaq, the highest since June  25, 2010, and well above the daily average of around 7.48  billion.
Losses occurred in all sectors. Among stocks hitting new  52-week lows were Bank of America, down 7.4 percent at $8.83,  Citigroup, down 6.6 percent at $34.81, and Hewlett-Packard,  down 5.1 percent at $32.54.
Among sectors, losses in energy and materials outpaced  others, with S&P energy down 6.8 percent and materials down  more than 6.6 percent.
U.S. crude futures settled down $5.30 to $86.63 a barrel in  New York.
The CBOE Volatility index jumped 35.4 percent to 31.66, its  highest since July 2010. It was the biggest rise since February  2007.
Overseas, the European Central Bank signaled it was buying  government bonds in response to a deepening European debt  crisis. In Japan, the government intervened in currency markets  to stem recent gains in the yen.
On Friday the government releases July’s payrolls report, a  closely watched number to gauge the U.S. economy.