Stocks Droped Sharply on Economic News

U.S. stocks posted the worst day in three weeks on Thursday as economic reports indicating a slowdown in global manufacturing increased investor anxiety. The Dow Jones industrial average was down 250.82 points, or 1.96 percent, at 12,573.57. The Standard & Poor’s 500 Index was down 30.18 points, or 2.23 percent, at 1,325.51. The Nasdaq Composite Index was down 71.36 points, or 2.44 percent, at 2,859.09.

Manufacturing activity in China, the world’s second-largest economy after the United States’, shrank, while euro zone business activity retreated for a fifth month, the latest data showed. In the United States, other reports showed a decline in existing home sales in May and a rise in first-time jobless claims that was worse than forecast, while regional factory activity contracted.

U.S. manufacturing grew at its slowest pace in 11 months in June and the number of Americans filing new applications for unemployment aid fell only slightly last week, further evidence the economy was weakening.

Existing-home sales decreased 1.5% from a month earlier to a seasonally adjusted annual rate of 4.55 million, the National Association of Realtors said Thursday.

Credit Suisse Group AG’s credit rating was cut three levels by Moody’s Investors Service, Morgan Stanley was reduced two levels and 13 other banks were downgraded in moves that may shake up competition among Wall Street’s biggest firms.

Greece’s new government promised on Thursday to renegotiate the terms of the country’s bailout without endangering its future in the euro, responding to intense pressure to ease mounting social tensions but also risking a showdown with European powers.