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US stocks fall sharply on fears over global manufacturing slowdown

Investors also feared Moody's ratings agency would downgrade major global banks, which it did after the closing bell.

China manufacturing shrinks 2012 6 21Enlarge
Chinese manufacturing activity is contracting, fuelling fears about a slowdown in global output. (AFP/Getty Images)

US stocks fell sharply today, posting their worst performance this month, after a batch of gloomy economic data and fears Moody’s ratings agency was poised to downgrade major global banks.

The Standard & Poor’s 500 fell 30.18 points, or 2.2 percent to 1,325.51 while the Dow Jones Industrial Average shed 250.82 points, or two percent, to 12,573.57, according to the New York Times.

The tech-heavy Nasdaq closed down 71.36 points, or 2.4 percent, at 2,859.09.

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The Financial Times reported that Moody’s matched expectations, cutting its ratings on 15 of the world’s biggest banks including Morgan Stanley, Credit Suisse, UBS and Citigroup.

Fears over global economic growth also weighed on sentiment after fresh data showed euro-area manufacturing contracted at the fastest pace in three years and output in China shrank, Bloomberg reported.

Manufacturing in the Philadelphia region also contracted, while sales of existing homes in the United States fell and a surprising number of Americans filed jobless claims, Reuters noted.

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"Traders and investors are really spooked today," Sal Arnuk, co-head of equity trading at Themis Trading, was quoted by CNN Money as saying.

The negative data came a day after the US Federal Reserve lowered its forecasts for economic growth and employment this year.

http://www.globalpost.com/dispatch/news/regions/americas/united-states/120621/us-stocks-fall-sharply-fears-over-global-manufac